Investment case of GALP Energia SGPS, S.A.

Abstract

This thesis presents a comprehensive valuation analysis of GALP Energia SGPS, S.A., a leading energy company listed on the Euronext Lisbon Stock Exchange. Using Discounted Cash Flow (DCF) and Relative Valuation methodologies, the study estimates a target share price to determine whether GALP is overvalued or undervalued. The structure of this thesis is designed to provide logical progression from valuation methodology to investment conclusion. The first chapter outlines the methodological framework, detailing the valuation techniques applied, namely the Discounted Cash Flow (DCF) model and Relative Valuation, as well as key financial concepts such as WACC, Cost of Equity, and Free Cash Flow (FCF). The second chapter provides an overview of GALP Energia, covering its business segments (Upstream, Industrial & Midstream, Commercial, and Renewables), its shareholder structure, and management remuneration policies, along with an industry analysis to contextualize the company within the broader energy sector. The third chapter presents the key forecasting assumptions and valuation results, incorporating macroeconomic trends, commodity price expectations, and company-specific drivers to project GALP’s financial performance. Finally, the fourth chapter delivers the investment conclusion, synthesizing the valuation findings to assess whether GALP’s current stock price accurately reflects its intrinsic value, ultimately guiding the investment recommendation. The DCF model estimates a fair value of €20.86 per share at year-end 2025, suggesting an upside potential of 30.8% compared to GALP’s market price of €15.95 as of December 31, 2024. In contrast, the Relative Valuation approach, using EV/EBITDA and P/E multiples, yields a more conservative estimate, with valuations of €11.01 per share (EV/EBITDA) and €8.03 per share (P/E), indicating a potential downside of 30.9% to 49.6% respectively of the market price.

Date of Award	9 Jul 2025
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Gonçalo Faria (Supervisor)