What is IGAS.L's Intrinsic value?

IGas Energy PLC (IGAS.L) Intrinsic Value Analysis

Executive Summary

As of May 29, 2025, IGas Energy PLC's estimated intrinsic value ranges from $13.27 to $13.48 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $13.27 +24.5%
Discounted Cash Flow (5Y) $13.48 +26.5%

Is IGas Energy PLC (IGAS.L) undervalued or overvalued?

With the current market price at $10.66, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate IGas Energy PLC's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 4.4% 4.9%
Equity market risk premium 6.4% 7.4%
Adjusted beta 0.46 0.74
Cost of equity 7.4% 10.9%
Cost of debt 7.0% 7.3%
Tax rate 29.7% 39.0%
Debt/Equity ratio 1.14 1.14
After-tax WACC 6.1% 7.5%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.8% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $59 (FY12-2022) to $56 (FY12-2032)
  • Net profit margin expansion from -20% to -11%
  • Capital expenditures maintained at approximately 10% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $13 $32M 87.9%
10-Year Growth $13 $31M 73.1%
5-Year EBITDA $(1,234) $7M 45.1%
10-Year EBITDA $(1,234) $12M 29.4%

Key Financial Metrics

Metric Value
Market Capitalization $14M
Enterprise Value $28M
Trailing P/E 0.00
Forward P/E 0.00
Trailing EV/EBITDA 1.75
Current Dividend Yield 0.00%
Dividend Growth Rate (5Y) 0.00%
Debt-to-Equity Ratio 1.14

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 55% $3.98
Discounted Cash Flow (5Y) 45% $3.37
Weighted Average 100% $13.36

Investment Conclusion

Based on our comprehensive valuation analysis, IGas Energy PLC's weighted average intrinsic value is $13.36, which is approximately 25.4% above the current market price of $10.66.

Key investment considerations:

  • Strong projected earnings growth (-20% to -11% margin)
  • Consistent cash flow generation

Given these factors, we believe IGas Energy PLC is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.