Transurban Group (TCL.AX): NSW toll reform progress encouraging, with digitization of toll notices announced.

Research evidence excerpt

Transurban Group (TCL.AX): NSW toll reform progress encouraging, with digitization of toll notices announced.

Transurban Group (TCL.AX)

23 June 2026 Citi Research

Transurban Group

Valuation

Our 12-month target price of A$15.8 is a 50/50 blended valuation based on discounted cash flows and relative valuation. For

our discounted cash flow valuation, we forecast cash flows until the end of each concession and discount them at WACC

adjusted annually to give a group valuation net of corporate debt of A$13.5. For the discount rates, we use a 4% risk-free rate

and 7% risk premium for both Australian and North American toll roads, asset betas of 0.4-0.6, and equity betas of 0.5-0.9. For

our relative valuation of A$18.15, we apply a c.22x EV/EBITDA multiple, in line with the historical average, to TCL’s 12-month

forward EBITDA (including an adjustment for discounted future EBITDA on development projects).

Risks

We see several risks impacting the achievability of our target price. General risks include: traffic being below the company’s

forecasts; the need for frequent capital raisings to fund growth; future inflation or deflation impacting toll escalation; significant

change in the elasticity of demand to toll increases; changes to the Concession Deed agreed with respective governments;

construction of competing or alternative routes; ability to roll over debt facilities as required; unexpected maintenance capital

expenditure; foreign exchange risk; interest rate risk; and force majeure.

Should the impact of these factors be greater than expected, the stock may have difficulty in achieving our earnings estimates

and valuation. Conversely, should any of these factors prove to have less of an effect than we anticipate, the stock may

outperform our target price.