Equity valuation - EDP Renováveis

Abstract

The renewables industry has been facing an important diffusion in the world of long-term energy scenarios. The necessary strict control over carbon dioxide emissions and the diversification of energy sources through ambitious world commitments is leading to a promising and continuously development of this sector. The equity valuation exercise here proposed aims to explore the connection between theoretically fundamentals with the practitioners work basis. We have designed a well theoretically supported work, with a cautious literature revision, and strongly adjusted for what equity research industry defends in practice, trying to deeply explore a more robust valuation exercise. EDP Renováveis (EDPR) is considered to be one of the leading players in the wind industry and its valuation requires a thorough analysis of industry and company specifications, considering also the actual financial markets conditions. This dissertation foresees a future development path of EDPR, based on its current framework, investment plan and natural redirections of its growth, as it has been assisted in the entire industry. We forecast a standalone valuation for EDPR of €12.509 Billion, corresponding to a target price per share of €7.10. Nevertheless, the consistent uncertainty of few main drivers’ comportments and whole projects construction, a sensitivity analysis is computed in order to account the potential future of this company. Independently of the sensitivity results of the base case, this equity valuation exercise clearly indicates a BUY recommendation.

Date of Award	26 Feb 2015
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	José Carlos Tudela Martins (Supervisor)