DCF Studio

    RED.MC · MCE · Utilities

    Redeia Corporación, S.A.

    Also onConsensus Drift

    Implied value per share

    EUR -0.12

    Market price

    EUR 15.11

    Implied upside

    -100.8%

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

    AdjustedFree cashflow is negative in at least one forecast year, so terminal value carries most of the valuation.
    AdjustedCapital expenditure runs at 56.8% of revenue against depreciation of 27.2%. A perpetuity has to be a steady state, so the terminal year uses maintenance capex at depreciation and then charges the reinvestment terminal growth requires (g/ROIC of NOPAT). The bridge is shown under Terminal Value.
    NoteRisk-free rate is an assumption: USD assumption - no free live source available for this market.

    Value Per Share

    Perpetuity growth
    EUR -0.12-100.8%
    Exit multiple
    EUR 3.60-76.1%
    Market price
    EUR 15.11

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (EUR). Outflows negative.

    -7015113-35075560FY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayEUR
    LineFY26FY27FY28FY29FY30CAGR
    RevenueEUR 1.6bnEUR 1.5bnEUR 1.4bnEUR 1.3bnEUR 1.2bn-6.3%
    EBITEUR 716.0mEUR 671.2mEUR 629.1mEUR 589.7mEUR 552.7m-6.3%
    NOPATEUR 558.3mEUR 523.3mEUR 490.5mEUR 459.8mEUR 431.0m-6.3%
    Add depreciation & amortisationEUR 422.6mEUR 396.2mEUR 371.3mEUR 348.1mEUR 326.3m-6.3%
    Less capital expenditureEUR -884.0mEUR -828.6mEUR -776.7mEUR -728.0mEUR -682.4m-6.3%
    Less increase in working capitalEUR -104.0mEUR -97.5mEUR -91.4mEUR -85.6mEUR -80.3m-6.3%
    Free cashflow to firmEUR -7.0mEUR -6.6mEUR -6.2mEUR -5.8mEUR -5.4m+6.3%
    Discount factor0.97070.91450.86160.81180.7649-
    Present valueEUR -6.8mEUR -6.0mEUR -5.3mEUR -4.7mEUR -4.1m+11.7%
    Present Value Of The ForecastEUR -27.0m

    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
    Beta0.630Reported 0.448, pulled toward 1.0 (Blume)
    Cost of equity8.30%Risk-free + beta x equity risk premium
    Cost of debt4.20%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationEUR 8.2bn57.0% of capital
    Total debtEUR 6.1bn43.0% of capital, book value as a proxy
    Tax rate22.0%Effective, capped at statutory
    WACC6.14%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 -0.12

    100% of EV

    Forecast FCFF, final year
    EUR -5.4m
    Capex at depreciation, working capital in reinvestment
    EUR 431.0m
    Less reinvestment at g/ROIC (40.7% of NOPAT)
    EUR -175.5m
    Capitalised
    EUR 255.4m
    ROIC (WACC floor)
    6.1%
    Terminal value, undiscounted
    EUR 7.2bn
    Terminal value, discounted
    EUR 5.5bn
    Enterprise value
    EUR 5.5bn
    Less net debt
    EUR 5.5bn
    Equity value
    EUR -64.5m

    Exit at 11.2x EBITDA

    Value per shareEUR 3.60

    100% of EV

    Terminal value, undiscounted
    EUR 9.8bn
    Terminal value, discounted
    EUR 7.5bn
    Enterprise value
    EUR 7.5bn
    Less net debt
    EUR 5.5bn
    Equity value
    EUR 2.0bn

    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%
    4.14%8.5210.2613.0318.1731.28
    5.14%2.783.123.584.225.22
    6.14%-0.22-0.17-0.12-0.07-0.02
    7.14%-1.99-1.95-1.90-1.86-1.82
    8.14%-3.30-3.27-3.24-3.20-3.17

    Outlined: this model. Green text: above today's price of 15.11. 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 year-6.3%10.0%+16.3pp
    Discount rate6.1%4.0%-2.1pp
    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.