Rumo SA (RAIL3.SA): 2Q‘26 Preview: Pricing Softness Persisting Despite Volumes, Revising Near-term Capex

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Rumo SA (RAIL3.SA): 2Q‘26 Preview: Pricing Softness Persisting Despite Volumes, Revising Near-term Capex

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26 Jul 2026 19:00:12 ET │ 15 pages

Rumo SA (RAIL3.SA)

2Q'26 Preview: Pricing Softness Persisting Despite Volumes, Revising

Near-term Capex

CITI'S TAKE Sell

Price (23 Jul 26 18:00) R$13.96 We reiterate our Sell rating and reduce TP to R$11/sh (from R$12) on

Target price R$11.00↓ forecast changes shown in Figure 2 (earnings released on August 12th). 2Q

volumes came better-than-expected and provided top-line boost, but from R$12.00

possibly came along with extra pricing stimulus. Despite the strong corn Expected share price return -21.2%

crop, internal consumption is ramping-up faster and possibly keeping 2H Expected dividend yield 1.6%

freight sales slow, suggesting further pricing softness ahead. Higher costs Expected total return -19.6%

to support capacity expansion should also weight on 2Q margins, despite Market Cap R$25,894M

better fixed-cost dilution from volumes. We also further postponed Lucas

US$5,093M do Rio Verde phase 2 project, expecting investments to start in 2028E,

progress slower and finish by 2032E (the contract deadline). This

alleviates cash burns next year, provide relief to leverage and financial

expenses, but the marginal NPV creation doesn't offset higher SELIC rates Filipe NielsenAC

and logistics softness. We remain cautious with the multiple downside +55-11-4009-5213

risks, while valuation at ~11% real IRR seem expensive. filipe.nielsen@citi.com

What needs to happen to shift our expectations? — Even after the stock declined

over 16% since late-April, the reaction seemed mostly driven by interest rates, while

fundamental risks remain intact. The company's disciplined capital allocation, with