Valuation Analysis of PT Perusahaan Listrik Negara (PLN) Persero Tbk Using Discounted Cash Flow (DCF)

Abstract

This study analyzes the fair value of shares of PT Perusahaan Listrik Negara (PLN)
Persero Tbk using the Discounted Cash Flow (DCF) approach. The research focuses
on projecting the company's free cash flows for the 2023-2027 period and calculating
terminal value based on sustainable growth assumptions. The analysis results show
that the fair value of PLN shares ranges from Rp 1,050 to Rp 1,250 per share, using a
Weighted Average Cost of Capital (WACC) assumption of 10.5% and a terminal
growth rate of 3%.
The findings indicate an undervaluation condition in PLN shares when compared to
market prices during the research period. Sensitivity analysis reveals that a 50 basis
point variation in WACC causes an 8-10% change in fair value, reflecting the model's
sensitivity to changes in capital market conditions. The terminal value component
contributes significantly, approximately 75-80% to the total enterprise value,
emphasizing the importance of long-term growth assumptions in the valuation
model.
This research also highlights the complexity of implementing the DCF model for a
government-regulated utility company. PLN's unique characteristics include
dependence on government electricity tariff policies, volatility of energy commodity
prices, and transformation programs toward clean energy that affect cash flow
projections. The gap between fair value and market price reflects investor perceptions
of regulatory risks and commodity price uncertainties. The study concludes that while
the DCF model provides a comprehensive framework for valuing PLN shares, its
implementation requires careful consideration of industry-specific factors and
regulatory environment.