Key Takeaways:
- Regulated Infrastructure Scale: Italgas distributes natural gas through 82,000 kilometers of pipeline infrastructure in Italy and Greece and generated €3B in annual revenue as a regulated utility business.
- Price Projection: Based on revenue growth accelerating to 19% annually and operating margins expanding to 49%, Italgas stock could reach €12 by December 2027.
- Potential Gains: This target represents total upside of 16% from the current price of €10, driven by margin expansion and the company’s €1B Greece infrastructure investment through 2031.
- Annual Return: Investors could see approximately 8% returns per year over the next 2 years, with dividend growth of 9% annually adding to total shareholder value.
Italgas SpA (IG) distributes natural gas through 82,000 kilometers of network infrastructure across Italy and Greece which generated €3 billion in revenue annually as a regulated utility serving residential and commercial customers.
The company attracted broader market attention in January 2026 when parent Snam (SRG) issued €500M in green bonds convertible into Italgas shares to fund a €1 billion infrastructure expansion across Greece through 2031.
Italgas reported €674M in Q3 2025 revenue, up 54% year-over-year, as accelerated infrastructure investment and customer growth drove one of the strongest quarterly performances in recent company history.
Operating margins for Italgas reached 34% in the latest twelve months with €1B in operating income, reflecting pricing strength and cost efficiency despite the capital-intensive requirements of utility network operations.
Even as Italgas demonstrates revenue growth accelerating and profitability expanding toward 49% by 2027, the stock trades at 11x earnings near historical norms, raising questions about market recognition of scale and margin potential.
What the Model Says for IG Stock
We analyzed Italgas using valuation assumptions based on infrastructure expansion in Greece and regulated utility pricing power across its 82,000 kilometer network.
Based on revenue growth of 18.8% annually, operating margins reaching 48.6%, and an exit multiple of 11.2x earnings, the model projects Italgas could rise to €12 per share.
That represents a 16% total return, or a 7.7% annualized return over the next 2 years.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for IG stock:
1. Revenue Growth: 18.8%
Italgas generated €3B in trailing revenue, up from €2B in 2021, as regulated pricing adjustments and network expansion drove mid-teens cumulative growth.
The company experienced a temporary 4% revenue decline in 2024, but Q3 2025 reversed sharply with 54% year-over-year growth as infrastructure investment accelerated.
Italgas committed €1B to expand its Greece operations through subsidiary Enaon by 2031, targeting energy transition infrastructure that adds regulated customer base and revenue visibility.
The regulated utility model provides built-in pricing mechanisms tied to inflation and capital deployment, insulating Italgas from demand volatility that affects merchant energy companies.
According to aggregated analyst estimates, 19% annual revenue growth reflects Greece expansion, resumed network investment, and inflation-linked pricing built into Italgas’s regulated utility model.
2. Operating Margins: 48.6%
Italgas operates as a regulated gas distribution utility where margins expand as capital investments depreciate and fixed costs spread across growing customer connections.
Operating margins improved from 27% in 2021 to 34% currently, demonstrating operational leverage as revenue growth outpaced expense increases during the investment phase.
Forward estimates project Italgas reaching 51% EBIT margins by 2029, supported by maturing capital projects and regulatory frameworks that allow cost recovery plus returns.
The Greece expansion requires upfront capital but operates under similar regulatory structures, meaning invested capital eventually converts into margin-accretive regulated asset base.
In line with analyst consensus projections, operating margins of 49% balance the cost of current infrastructure spending against the natural margin expansion that occurs as regulated assets mature.
3. Exit P/E Multiple: 11.2x
Italgas has traded consistently between 11x and 12x earnings over the past decade, reflecting stable utility economics and dividend-focused shareholder base expectations.
The regulated business model limits earnings volatility but also caps multiple expansion, as growth comes primarily from capital deployment rather than margin surprise or market share gains.
Parent company Snam’s €500M convertible bond issuance introduces potential dilution risk, though the green financing structure supports long-term infrastructure investment and ESG positioning.
The €1B Greece commitment increases execution risk and near-term capital intensity, but regulatory frameworks in both Italy and Greece provide earnings visibility once projects mature.
Based on surveyed analyst expectations, an 11x exit multiple aligns with typical utility valuations and accounts for both Italgas’s stable regulated earnings and the execution risk of deploying €1B in Greece.
What Happens If Things Go Better or Worse?
Italgas outcomes through December 2029 depend on Greece expansion execution, regulatory pricing adjustments, and the company’s ability to convert capital deployment into margin-accretive regulated earnings.
- Low Case: If Greece infrastructure investment faces delays or Italian regulatory frameworks tighten, revenue grows around 11%, net margins hold near 28%, and valuation compresses on execution concerns → -1% annualized return.
- Mid Case: With Greece expansion proceeding as planned and regulatory mechanisms supporting inflation-linked pricing, revenue growth near 12%, margins improving toward 29%, and valuation stabilizing around utility sector norms → 5.2% annualized return.
- High Case: If Greece deployment accelerates faster than expected and operating leverage from maturing assets exceeds forecasts, revenue reaches 13%, margins approach 30%, and investor confidence in execution lifts valuation → 10.5% annualized return.
The €12 target depends on executing the Greece expansion and converting infrastructure investment into regulated earnings, requiring operational discipline rather than valuation re-rating.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
