SABESP Opportunity window is open - Upgrade to Buy

Research evidence excerpt

SABESP Opportunity window is open - Upgrade to Buy

Global Research

15 June 2026ab

SABESP Equities

BrazilOpportunity window is open - Upgrade to Buy

Water Utilities

12-month rating Buy

Weak stock performance offers attractive entry point Prior : Neutral

We are upgrading Sabesp to a Buy, from Neutral, while maintaining our PT 12m price target R$38.00

unchanged at R$38/share. In our recent downgrade to Neutral (link), we argued

that stock price was fairly reflecting Sabesp's operation and further upside would

Price (15 Jun 2026) R$28.01

depend on inorganic growth. We do not think that is the case anymore after Sabesp's

stock's underperformance (-20% from its high in April), which we believe was mostly RIC: SBSP3.SA BBG: SBSP3 BZ

driven by the outflow of foreign capital from Brazil rather than a deterioration of

Trading data and key metrics

the company's fundamentals. A reversal of this scenario or successful execution of

52-wk range R$35.21-21.38

capex at a ~R$5bn per year pace could help rerate Sabesp. In our estimates, the

company is trading at a real IRR of 13.1%, with 36% upside to current stock price. We Market cap. R$98.7b/US$19.5b

believe the company is in a favourable position to deliver solid EBITDA growth Shares o/s 3,525m (PREF)

(17.5% 2025-2030 CAGR, ex-VNR) through its investments to achieve Free float 49%

universalization leading to net RAB growth. Avg. daily volume ('000) 16,609

Avg. daily value (m) R$514.3

Slightly lower capex estimates Common s/h equity (12/26E) R$46.8b

We are lowering our capex estimates for Sabesp in upcoming years, considering the P/BV (12/26E) 2.1x

operational challenge to execute a much higher pace of investments. The company Net debt to EBITDA (12/26E) 2.6x

had a weak start in 1Q26 (R$3.7bn capex) considering R$20bn estimated by the