Brazilian Utilities ENGI/TAEE: R$2.3bn asset sale deal

Research evidence excerpt

Brazilian Utilities ENGI/TAEE: R$2.3bn asset sale deal

Arthur Pereira, CFA AC Latin America Equity Research

(55-11) 4950-4101 21 May 2026 J P M O R G A N

arthur.pereira@jpmorgan.com

Investment Thesis, Valuation and Risks

Energisa (Overweight; Price Target: R$63.00)

Investment Thesis

We believe Energisa is a genuine growth story in the relatively defensive Brazilian utilities

space. Attractive relative valuation and solid growth ahead support our OW rating. Despite

looming uncertainties regarding the concession renewal of distribution companies, we

remain constructive on the segment vis-à-vis generation and transmission. Distribution

provides growth compounding at attractive returns for efficient players like ENGI11.

Energisa is one of our top picks as a high-quality private integrated company that continues

to deliver top-line expansion supported by volume growth and inflation, strong cost and

energy loss performance, investment discipline, and an optimized capital structure.

Valuation

Key assumptions underlying our DCF-driven Dec 2026 price target of R$63 include (i) a

9% real cost of equity, (ii) RAB payment at the end of cash flows, and (iii) regulatory WACC

of 8% for future tariff reviews.

Risks to Rating and Price Target

Unreasonable or EPS-dilutive M&A. Eventual asset purchases that don’t make sense to

the existing core business or expensive acquisitions that prove to be EPS dilutive would be

likely to elicit a negative reaction from the market.

Slower-than-expected energy consumption growth. If consumption growth in

Energisa’s concession areas materializes at a slower-than-projected pace, it could pose

downside risks to operating cash flow and consequently the price target.

Overhang from relevant stockholders. We note that financial investor FIA Samambaia