What is INF.PA's Intrinsic value?

Infotel SA (INF.PA) Intrinsic Value Analysis

Executive Summary

As of June 1, 2025, Infotel SA's estimated intrinsic value ranges from $43.26 to $271.33 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $57.35 +37.5%
Discounted Cash Flow (5Y) $54.45 +30.6%
Dividend Discount Model (Multi-Stage) $43.26 +3.7%
Dividend Discount Model (Stable) $46.80 +12.2%
Earnings Power Value $271.33 +550.7%

Is Infotel SA (INF.PA) undervalued or overvalued?

With the current market price at $41.70, 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 Infotel SA's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

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 3.0% 3.5%
Equity market risk premium 5.8% 6.8%
Adjusted beta 0.58 0.75
Cost of equity 6.4% 9.1%
Cost of debt 5.0% 5.0%
Tax rate 27.4% 29.9%
Debt/Equity ratio 0.11 0.11
After-tax WACC 6.1% 8.5%

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: 7.3% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $295 (FY12-2024) to $406 (FY12-2034)
  • Net profit margin expansion from 6% to 6%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $54 $302M 74.8%
10-Year Growth $57 $322M 58.6%
5-Year EBITDA $49 $264M 71.1%
10-Year EBITDA $52 $287M 53.4%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 75.0%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 7.7%
  • Long-term growth rate: 2.0%
  • Fair value: $43.26 (3.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 9.1% (Low) to 6.4% (High)
  • Long-term growth rate: 1.0% (Low) to 3.0% (High)
  • Fair value range: $23 to $71
  • Selected fair value: $46.80 (12.2% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $129M
Discount Rate (WACC) 8.5% - 6.1%
Enterprise Value $1,514M - $2,121M
Net Debt $(79)M
Equity Value $1,593M - $2,200M
Outstanding Shares 7M
Fair Value $228 - $315
Selected Fair Value $271.33

Key Financial Metrics

Metric Value
Market Capitalization $291M
Enterprise Value $213M
Trailing P/E 15.77
Forward P/E 15.07
Trailing EV/EBITDA 8.45
Current Dividend Yield 475.64%
Dividend Growth Rate (5Y) 18.34%
Debt-to-Equity Ratio 0.11

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) 30% $17.21
Discounted Cash Flow (5Y) 25% $13.61
Dividend Discount Model (Multi-Stage) 20% $8.65
Dividend Discount Model (Stable) 15% $7.02
Earnings Power Value 10% $27.13
Weighted Average 100% $73.63

Investment Conclusion

Based on our comprehensive valuation analysis, Infotel SA's weighted average intrinsic value is $73.63, which is approximately 76.6% above the current market price of $41.70.

Key investment considerations:

  • Strong projected earnings growth (6% to 6% margin)
  • Consistent cash flow generation
  • Conservative capital structure (Debt/Equity of 0.11)
  • Historical dividend growth of 18.34%

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