Intermoney | Indra informed the National Securities Market Commission (CNMV) yesterday, with the market closed, that the board of directors had approved the formal process of selling Minsait Payments separately from its parent company, having detected a high level of interest in ķthe market for the means of payment business. According to several media reports, the value of the subsidiary could be in the region of €500-600 million. This would imply an EV/EBIT multiple of 15x, a higher multiple than the one obtained for the joint sale of Minsait and similar to the one obtained by Sabadell for the sale of its payment business to Nexi. For Minsait as a whole, the valuation would be around €1,800-€2,000mn (9x-10x EBIT).
Assessment: Although the deal is at a preliminary stage and no firm decision has been taken yet, we would view it as positive if it goes through, as it would maximise the value of the sale of Minsait. However, we believe that for the value of the defence division to crystallise, Minsait should be sold in its entirety.
It should be recalled that Minsait’s EBIT margins (5.5%), weigh down those of the T&D division (12.7%), so its integral sale would be the best way to improve the group’s profitability and for the market to visualise Indra as an exclusively defence company, which would allow it to trade at higher multiples. Indra currently trades at 5.5x EV/EBIT and 10.4x P/E, well below the defence sector average (11.1X EV/EBIT and 18.6x P/E).
Buy recommendation with a P.O of €22.
