LyondellBasell Industries N.V.LYBNYSE

Overview Intelligence Charts News Fundamentals Key Metrics TTM Financials Earnings Growth Rating Analysts Institutional Peers Historical

DCF Valuation

DCF Valuation Summary

Strong Buy

Fair Value: $175.28 per share(market-calibrated)

+202.5%

Upside to Fair Value

Current

$57.94

Pure Model

$191.95

Fair Value

$175.28

Bull Case

$220.11

Bear Case

$172.17

Market Reality Check

Model Terminal Growth

2.25%

Market-Implied Growth

0.50%

Calibrated Growth

1.64%

Fair value uses 65% model / 35% market-implied terminal growth. Pure model: $191.95.

What's Driving This Ratingfor LYB

↓

CapEx normalizing toward maintenance

Historical CapEx is 6.03% of revenue (heavy investment phase). Model fades this to 4.00% by Year 10, freeing up ~$732M in annual FCF. This is the biggest driver of long-term cash flow improvement.

↑

Margin expansion modeled

Current EBIT margin is 7.58% — below the sector mature average of 13.00%. Model expands margins as the business scales and operating leverage kicks in. Year 10 EBIT reaches $4.3B (11.86% margin).

→

Moderate revenue growth

Analyst consensus projects -2.33% revenue growth, fading to 2.25% by Year 10. Revenue reaches $36.0B (vs $30.2B today).

🎯

Market pricing in lower growth than model

The market implies only 0.50% perpetual growth — 175bps below the model's 2.25%. This suggests the market sees headwinds or risks not in the model.

→

Moderate cash flow conversion

Year 10 FCF/EBITDA conversion is 59.75% — acceptable but leaves room for improvement. High reinvestment needs consume a meaningful portion of operating cash flow.

Weighted Average Cost of Capital (WACC)

Cost of Equity (CAPM)

Risk-Free Rate (Rf)4.50%

Beta (β)0.71

Market Risk Premium4.50%

*Using current implied premium (4.5% per Damodaran 2026), not historical (6.5%)

Cost of Equity (Re)7.68%

Cost of Debt

Pre-tax Cost of Debt2.85%

Tax Rate21.00%

After-tax Cost of Debt2.25%

Equity Weight (E/V)53.89%

Debt Weight (D/V)46.11%

WACC Calculation

WACC = (E/V × Re) + (D/V × Rd × (1-Tc))

WACC = (53.89% × 7.68%) + (46.11% × 2.25%)

= 5.50%

10-Year Free Cash Flow Projections(showing years 1, 3, 5, 7, 10)

Year	Year 1	Year 3	Year 5	Year 7	Year 10
Revenue	$29.5B	$30.6B	$32.2B	$33.7B	$36.0B
EBIT	$2.2B	$2.3B	$3.1B	$3.6B	$4.3B
Tax	$469M	$488M	$644M	$762M	$896M
NOPAT	$1.8B	$1.8B	$2.4B	$2.9B	$3.4B
+ Depreciation	$1.4B	$1.4B	$1.5B	$1.6B	$1.7B
- Capex	$1.8B	$1.7B	$1.7B	$1.6B	$1.4B
- Δ NWC	-$58M	$80M	$58M	$61M	$65M
Free Cash Flow	$1.4B	$1.5B	$2.2B	$2.8B	$3.6B
Discount Factor	0.948	0.852	0.765	0.687	0.585
Present Value	$1.4B	$1.3B	$1.7B	$1.9B	$2.1B

FCF Formula: Free Cash Flow = NOPAT + Depreciation - Capex - Change in Net Working Capital

Terminal Value Calculation

Perpetuity Growth Method

Year 10 FCF$3.6B

Terminal Growth Rate2.25%

WACC5.50%

TV = FCF₁₀ × (1+g) / (WACC-g)

Terminal Value$112.1B

PV of Terminal Value$65.6B

Exit Multiple Method

Year 10 EBITDA$6.0B

Exit Multiple (EV/EBITDA)14.0x

TV = EBITDA₁₀ × Exit Multiple

Terminal Value$83.5B

PV of Terminal Value$48.9B

Valuation Summary

Perpetuity Growth Method

PV of Projected FCFs$17.1B

PV of Terminal Value$65.6B

Enterprise Value$82.7B

(-) Net Debt$12.5B

Equity Value$70.2B

Shares Outstanding322M

Price per Share$217.97

Exit Multiple Method

PV of Projected FCFs$17.1B

PV of Terminal Value$48.9B

Enterprise Value$65.9B

(-) Net Debt$12.5B

Equity Value$53.4B

Shares Outstanding322M

Price per Share$165.93

Pure Model Fair Value

$191.95

Average of perpetuity growth and exit multiple methods (before market calibration)

Sensitivity AnalysisPrice per Share

WACC ↓ / Growth →	1.25%	1.75%	2.25%	2.75%	3.25%
3.50%	$289.10	$304.32	$290.18	$276.71	$263.87
4.50%	$211.76	$232.59	$262.68	$276.71	$263.87
5.50%	$167.21	$177.93	$191.95	$211.07	$238.69
6.50%	$137.15	$143.45	$151.22	$161.07	$173.95
7.50%	$114.95	$118.97	$123.75	$129.53	$136.68

How to read: This table shows how the valuation changes with different WACC (discount rate) and terminal growth rate assumptions. Green = undervalued, Red = overvalued.

Scenario Analysis

Bear Case

$172.17

197.2% vs current

• -25% vs analyst consensus
• Terminal growth: 2.0%
• Beta: 0.88

Base Case

$191.95

231.3% vs current

• Analyst consensus
• Terminal growth: 2.3%
• Beta: 0.71

Bull Case

$220.11

279.9% vs current

• +25% vs analyst consensus
• Terminal growth: 2.8%
• Beta: 0.60

Key Assumptions & Drivers• Basic Materials Sector

Growth Assumptions (Select Years)

Year 1 Revenue Growth-2.33%

Year 3 Revenue Growth3.31%

Year 5 Revenue Growth2.25%

Year 7 Revenue Growth2.25%

Year 10 Revenue Growth2.25%

Terminal Growth Rate2.25%

Margin & Efficiency

Current EBIT Margin7.58%

Terminal EBIT Margin13.00%

Tax Rate21.00%

Historical Capex / Rev6.03%

Terminal Capex / Rev4.00%

NWC / Revenue8.20%

Key Drivers: Revenue growth, operating margin expansion, capex efficiency, and working capital management are the primary drivers of cash flow generation. Terminal value assumptions significantly impact final valuation.

Institutional-Grade Methodology

Actual Company Data: Revenue, EBIT, Capex, NWC, Tax Rate, Interest Expense, Beta

Market Assumptions: Risk-free: 4.5% (10Y), MRP: 4.5% (Damodaran 2026), Exit: 14x EV/EBITDA (Basic Materials sector)

This DCF model is for informational purposes only. Projections are based on assumptions that may not materialize. Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.

Explore More

S&P 500 Screener

Filter and sort all 500 stocks

Market Movers

Today's biggest gainers and losers

Market Heatmap

Visual sector performance