DCF Studio

    INGA.AS · AMS · Financial Services

    ING Groep N.V.

    Also onConsensus Drift

    Implied value per share

    EUR 3.51

    Market price

    EUR 31.71

    Implied upside

    -88.9%

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

    Wrong toolThis is a financial. Banks and insurers report no meaningful operating income, and capex and working capital do not mean what a free-cashflow model assumes, so a DCF will misprice it. The model below runs on best-effort numbers - treat it as an illustration, not a valuation.
    AdjustedReported capital expenditure averages 1.33% of revenue against depreciation and amortisation of 3.16%. A business cannot depreciate more than it invests indefinitely. Capex has been set to 3.16% of revenue so the forecast is not handed free growth. The accounts do not separate depreciation from amortisation, so the combined charge is used - if a large part of it is amortisation of an acquisition, the reported capex is probably right and this substitution is not. Override it if the reported figure is right.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Current EV/EBITDA of 22.1x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    EUR 3.51-88.9%
    Exit multiple
    EUR 34.12+7.6%
    Market price
    EUR 31.71

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    0bn4bn7bnFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 24.4bnEUR 26.0bnEUR 27.8bnEUR 29.6bnEUR 31.6bn+6.6%
    EBITEUR 9.6bnEUR 10.2bnEUR 10.9bnEUR 11.6bnEUR 12.4bn+6.6%
    NOPATEUR 7.2bnEUR 7.6bnEUR 8.2bnEUR 8.7bnEUR 9.3bn+6.6%
    Add depreciation & amortisationEUR 770.7mEUR 821.8mEUR 876.3mEUR 934.4mEUR 996.4m+6.6%
    Less capital expenditureEUR -770.7mEUR -821.8mEUR -876.3mEUR -934.4mEUR -996.4m+6.6%
    Less increase in working capitalEUR -1.5bnEUR -1.6bnEUR -1.7bnEUR -1.8bnEUR -2.0bn+6.6%
    Free cashflow to firmEUR 5.7bnEUR 6.0bnEUR 6.4bnEUR 6.9bnEUR 7.3bn+6.6%
    Discount factor0.96890.90950.85370.80130.7522-
    Present valueEUR 5.5bnEUR 5.5bnEUR 5.5bnEUR 5.5bnEUR 5.5bn+0.1%
    Present Value Of The ForecastEUR 27.4bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.20%USD assumption - no free live source available for this market (assumption)
    Equity risk premium6.50%Market assumption
    Beta0.933Reported 0.900, pulled toward 1.0 (Blume)
    Cost of equity10.26%Risk-free + beta x equity risk premium
    Cost of debt6.20%Implied cost of debt of 20.7% is not a credible funding cost, so risk-free + 2bp is assumed instead. Interest expense and reported debt are measuring different things - common for banks, whose interest expense includes deposits that total debt excludes.
    Market capitalisationEUR 90.4bn33.5% of capital
    Total debtEUR 179.2bn66.5% of capital, book value as a proxy
    Tax rate25.0%Effective, capped at statutory
    WACC6.53%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 shareEUR 3.51

    80% of EV

    Forecast FCFF, final year
    EUR 7.3bn
    Capex at depreciation, working capital in reinvestment
    EUR 9.3bn
    Less reinvestment at g/ROIC (38.3% of NOPAT)
    EUR -3.5bn
    Capitalised
    EUR 5.7bn
    ROIC (WACC floor)
    6.5%
    Terminal value, undiscounted
    EUR 145.4bn
    Terminal value, discounted
    EUR 109.4bn
    Enterprise value
    EUR 136.8bn
    Less net debt
    EUR 126.3bn
    Equity value
    EUR 10.5bn

    Exit at 20.0x EBITDA

    Value per shareEUR 34.12

    88% of EV

    Terminal value, undiscounted
    EUR 267.1bn
    Terminal value, discounted
    EUR 200.9bn
    Enterprise value
    EUR 228.3bn
    Less net debt
    EUR 126.3bn
    Equity value
    EUR 102.0bn

    Spread between methods: 163%.

    Sensitivity

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

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    4.53%24.2524.5324.8125.0925.37
    5.53%11.7812.0012.2212.4412.66
    6.53%3.163.333.513.693.87
    7.53%-3.16-3.01-2.86-2.72-2.57
    8.53%-7.98-7.85-7.73-7.60-7.48

    Outlined: this model. Green text: above today's price of 31.71. 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 year6.6%20.2%+13.6pp
    EBIT margin39.1%62.0%+22.9pp
    Discount rate6.5%4.1%-2.4pp
    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.