Ignitis Group: making headway (BUY - transfer of coverage)
We transfer coverage of Ignitis, reiterating our BUY rating and setting a price target (PT) of EUR 24.8/share. The company has a diversified earnings mix, with half its 2024 adj. EBITDA generated by RES (Green Capacities) and 41% from gas and power distribution (Networks). Only 8% of Ignitis’ EBITDA is exposed to fossil fuels (Reserve Capacities). This makes Ignitis very “clean” compared to most CEE utilities. The earnings are also predictable: its RES operate on fixed-priced PPAs/CfDs while both the Networks and Reserve Capacities segments are highly regulated. Ignitis plans to add 700MW of new RES in 2025E and another 2-3GW by the end of the decade. Based on its track record to date, Ignitis’ RES capacity expansion should proceed smoothly, but still entails average annual RES capex of EUR 0.4bn (plus another EUR 0.4bn in the other segments) until end-2030E, pushing peak gearing to 4.7x EBITDA by 2030E. Ignitis is trading at 2025-27E EV/adj. EBITDAs of 6.4-6.6x and P/E of 5.0-7.8x and offers an average dividend yield of 6.8%over the same period, on our estimates. This makes it look attractive to us.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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