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
