Revisiting post restructuring plan approval – lowering PO and reiterate Underperform

Research evidence excerpt

Revisiting post restructuring plan approval – lowering PO and reiterate Underperform

Tax inefficiency is also negative; Reform might bring relief

Raízen estimates that Raízen Combustiveis will incur a recurring cash impact of

approximately R$1.5bn per year (in real terms) from FY27 onward related to the

realization of recoverable tax credits. Although the business continues to generate

substantial PIS/Cofins credits, its projected taxable income is not expected to be

sufficient to fully offset them, creating a structural cash drag as credits accumulate

faster than they can be monetized.

We estimate the present value of this headwind at ~R$15bn, equivalent to around

R$0.11/sh, and already incorporate this effect into our valuation. Over the longer term,

Brazil’s Tax Reform, scheduled to begin implementation in 2027, could partially alleviate

this issue. The new indirect tax framework is expected to introduce mechanisms for the

cash reimbursement of accumulated credits, reducing the risk of persistent credit build-

up across the supply chain and improving the recoverability of tax assets.

Combustiveis: strong mg, improving regulatory framework

Raizen is the second-largest fuel distributor in Brazil, operating under the Shell brand—

one of the most preferred brands among consumers— with a network of 6,734 service

stations (as of FY4Q26). It sells 28–29bn liters annually, equivalent to 18.8% market

share in 2025. Diesel accounted for 52% of FY2026 volumes, followed by gasoline

(30%), ethanol (12%), and aviation (5%). The company also operates a lubricants

business, with annual production capacity of 280k m3 and current market share of 19%.

Exhibit 9: Among listed companies, Vibra leads with 21-23% of market share

Market Share for all fuels