VOD.L · LSE · Communication Services

Vodafone Group Public Limited Company

Also onConsensus Drift

Implied value per share

GBp 465.32

Market price

GBp 126.15

Implied upside

+268.9%

5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · EUR model at 0.8573

AdjustedReports in EUR, trades in GBp. Modelled in EUR, converted at the end.

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

Value Per Share

Perpetuity growth

GBp 465.32+268.9%

Exit multiple

GBp 213.48+69.2%

Market price

GBp 126.15

Same forecast, different terminal treatment. Percentages vs price.

Assumptions

Discount rate (WACC)5.56%Growth after the forecast2.50%Exit EV/EBITDA4.3xTax rate3.76%Capex, % of revenue18.81%Depreciation, % of revenue28.80%Working capital, % of revenue growth9.86%

Forecast Cashflows

Reporting currency (EUR). Outflows negative.

Nominal FCFFDiscounted to todayEUR

Line	FY27	FY28	FY29	FY30	FY31	CAGR
Revenue	EUR 41.4bn	EUR 42.4bn	EUR 43.5bn	EUR 44.5bn	EUR 45.6bn	+2.4%
EBIT	EUR 4.6bn	EUR 4.7bn	EUR 4.8bn	EUR 5.0bn	EUR 5.1bn	+2.4%
NOPAT	EUR 4.4bn	EUR 4.6bn	EUR 4.7bn	EUR 4.8bn	EUR 4.9bn	+2.4%
Add depreciation & amortisation	EUR 11.9bn	EUR 12.2bn	EUR 12.5bn	EUR 12.8bn	EUR 13.1bn	+2.4%
Less capital expenditure	EUR -7.8bn	EUR -8.0bn	EUR -8.2bn	EUR -8.4bn	EUR -8.6bn	+2.4%
Less increase in working capital	EUR -96.1m	EUR -98.4m	EUR -100.8m	EUR -103.2m	EUR -105.7m	+2.4%
Free cashflow to firm	EUR 8.5bn	EUR 8.7bn	EUR 8.9bn	EUR 9.1bn	EUR 9.3bn	+2.4%
Discount factor	0.9733	0.9221	0.8736	0.8276	0.7840	-
Present value	EUR 8.3bn	EUR 8.0bn	EUR 7.8bn	EUR 7.5bn	EUR 7.3bn	-3.0%
Present Value Of The Forecast	EUR 38.9bn

Discount Rate

Source shown per component. All overridable above.

Risk-free rate	4.50%	GBP assumption - no free live source available for this market (assumption)
Equity risk premium	5.50%	Market assumption
Beta	0.553	Reported 0.333, pulled toward 1.0 (Blume)
Cost of equity	7.54%	Risk-free + beta x equity risk premium
Cost of debt	4.63%	Interest expense / average total debt
Market capitalisation	EUR 29.2bn	35.6% of capital
Total debt	EUR 52.6bn	64.4% of capital, book value as a proxy
Tax rate	3.8%	Effective, capped at statutory
WACC	5.56%	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 5.43

77% of EV

Forecast FCFF, final year: EUR 9.3bn
Capex at depreciation, working capital in reinvestment: EUR 9.1bn
Less reinvestment at g/ROIC (45.0% of NOPAT): EUR -4.1bn
Capitalised: EUR 5.0bn
ROIC (WACC floor): 5.6%

Terminal value, undiscounted: EUR 168.1bn
Terminal value, discounted: EUR 131.8bn
Enterprise value: EUR 170.8bn
Less net debt: EUR 40.3bn
Equity value: EUR 130.4bn

Exit at 4.3x EBITDA

Value per shareEUR 2.49

61% of EV

Terminal value, undiscounted: EUR 78.1bn
Terminal value, discounted: EUR 61.2bn
Enterprise value: EUR 100.2bn
Less net debt: EUR 40.3bn
Equity value: EUR 59.8bn

Spread between methods: 74%.

Sensitivity

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

Long-run growth
Discount rate	1.50%	2.00%	2.50%	3.00%	3.50%
3.56%	10.13	10.84	12.18	15.87	84.55
4.56%	6.89	6.93	6.96	7.00	7.03
5.56%	5.37	5.40	5.43	5.45	5.48
6.56%	4.32	4.34	4.36	4.38	4.40
7.56%	3.54	3.56	3.58	3.60	3.61

Outlined: this model. Green text: above today's price of 1.47. 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.

Input	Model	Implied	Gap
Revenue growth, every year	2.4%	-15.5%	-17.9pp
EBIT margin	11.1%	-0.5%	-11.6pp
Discount rate	5.6%	12.8%	+7.2pp

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.