DCF Studio

    IMI.L · LSE · Industrials

    IMI plc

    Also onConsensus Drift

    Implied value per share

    GBp 1563.20

    Market price

    GBp 3094.00

    Implied upside

    -49.5%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    NoteRisk-free rate is an assumption: GBP assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    GBp 1563.20-49.5%
    Exit multiple
    GBp 2632.14-14.9%
    Market price
    GBp 3094.00

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (GBP). Outflows negative.

    0m182m364mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayGBP
    LineFY26FY27FY28FY29FY30CAGR
    RevenueGBP 2.4bnGBP 2.5bnGBP 2.6bnGBP 2.7bnGBP 2.8bn+4.0%
    EBITGBP 380.4mGBP 395.6mGBP 411.4mGBP 427.8mGBP 444.8m+4.0%
    NOPATGBP 292.3mGBP 304.0mGBP 316.1mGBP 328.7mGBP 341.8m+4.0%
    Add depreciation & amortisationGBP 131.4mGBP 136.6mGBP 142.1mGBP 147.7mGBP 153.6m+4.0%
    Less capital expenditureGBP -93.1mGBP -96.8mGBP -100.7mGBP -104.7mGBP -108.9m+4.0%
    Less increase in working capitalGBP -19.0mGBP -19.8mGBP -20.5mGBP -21.4mGBP -22.2m+4.0%
    Free cashflow to firmGBP 311.6mGBP 324.0mGBP 337.0mGBP 350.4mGBP 364.4m+4.0%
    Discount factor0.95510.87130.79490.72510.6615-
    Present valueGBP 297.6mGBP 282.3mGBP 267.8mGBP 254.1mGBP 241.0m-5.1%
    Present Value Of The ForecastGBP 1.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.50%GBP assumption - no free live source available for this market (assumption)
    Equity risk premium5.50%Market assumption
    Beta1.029Reported 1.044, pulled toward 1.0 (Blume)
    Cost of equity10.16%Risk-free + beta x equity risk premium
    Cost of debt4.50%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationGBP 7.3bn91.9% of capital
    Total debtGBP 643.7m8.1% of capital, book value as a proxy
    Tax rate23.2%Effective, capped at statutory
    WACC9.62%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareGBP 15.63

    70% of EV

    Forecast FCFF, final year
    GBP 364.4m
    Capex at depreciation, working capital in reinvestment
    GBP 388.3m
    Less reinvestment at g/ROIC (16.2% of NOPAT)
    GBP -63.0m
    Capitalised
    GBP 325.3m
    ROIC (reported)
    15.4%
    Terminal value, undiscounted
    GBP 4.7bn
    Terminal value, discounted
    GBP 3.1bn
    Enterprise value
    GBP 4.4bn
    Less net debt
    GBP 528.8m
    Equity value
    GBP 3.9bn

    Exit at 14.6x EBITDA

    Value per shareGBP 26.32

    81% of EV

    Terminal value, undiscounted
    GBP 8.7bn
    Terminal value, discounted
    GBP 5.8bn
    Enterprise value
    GBP 7.1bn
    Less net debt
    GBP 528.8m
    Equity value
    GBP 6.6bn

    Spread between methods: 51%.

    Sensitivity

    Value per share (GBP) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    7.62%20.1921.1122.2023.5225.15
    8.62%17.1417.7218.3819.1620.08
    9.62%14.8315.2115.6316.1116.67
    10.62%13.0413.2813.5613.8614.21
    11.62%11.5911.7611.9412.1312.35

    Outlined: this model. Green text: above today's price of 30.94. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year4.0%21.0%+17.0pp
    EBIT margin15.9%31.1%+15.3pp
    Discount rate9.6%6.2%-3.4pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.