We value Alupar through a DDM model, reaching a target price of R$37.0/share for 2025-2055 period, in which the company maximizes its dividend payments throughout its concession’s terms. We discount our DDM-based target price at a real kE of 7.5%.

The key risks to our investment thesis and target price on Alupar are:

(i) Regulatory uncertainties. Alupar faces downside risks primarily stemming from regulatory uncertainties, potential delays in project execution, and changes in macroeconomic conditions. Regulatory risks include the possibility of adverse revisions in tariff structures or concessions, which could impact the company’s revenue predictability and profitability. 

(ii) Additionally, execution risks associated with delays in greenfield projects or unexpected cost overruns could lead to increased capital expenditures and reduced returns. 

(iii) On the macroeconomic front, rising interest rates or foreign exchange volatility could elevate financing costs, particularly given the company’s exposure to long-term debt linked to infrastructure development. 

These factors could collectively pressure margins, affect cash flow generation, and ultimately impact shareholder returns.