New strategic plan unlocks superior growth at a discount
08 May 2026 00:00:00 ET
CITI’S TAKE
We update our model and raise our TP to €22.6 (from €19), reiterating our Buy following PPC’s €24bn capex plan aimed at capturing structurally higher power prices in SEE. Even on conservative assumptions (excluding unsecured RES and data centre upside), we forecast ~12% EPS growth post-dilution, which is still sector‑leading. Despite this, PPC trades on just ~10x FY28 P/E, making it the cheapest name vs peers which trade at an avg ~15x. We believe the strategic plan addresses legacy concerns around scale and liquidity, while perceived emerging market risk should diminish as Greece enters the developed market index in 2027. Taken together, this should support a gradual narrowing of the valuation discount. Our TP implies ~13x P/E, still a ~15% discount to peers, offering a de‑risked entry point.
PPC positioning — Per our Deep Dive, PPC is financially net long the power price, positioning it to benefit from a structurally higher‑for‑longer pricing environment. While merchant generation is partially offset by fixed‑price customer contracts and forward hedging, as these unwind over time, a greater share of earnings becomes directly exposed to wholesale power prices, increasing PPC’s net long exposure.
Model update — We update our forecasts to reflect only secured capacity growth (6.6GW out of a total 11.6GW RES pipeline), resulting in a more conservative base case than both company guidance and consensus. Even so, our updated model delivers a ~50% uplift to 2030 ANI versus our prior estimates, although EPS is broadly flat in 2030 due to dilution.
Key risks — The principal risk to the investment case is execution, particularly beyond FY28 where delivery relies more heavily on unsecured RES, the development of new growth drivers such as data centres, and expansion into new markets with longer development timelines and greater regulatory complexity. Any delays or changes in policy could push out earnings delivery and temper returns.
Valuation — Despite sector-leading growth on conservative assumptions, PPC trades on just ~10x FY28 P/E. Our €22.6 TP implies ~13x P/E, still a ~15% discount to peers, supporting a de-risked entry point.
