Valuation of Nel Hydrogen ASA

2018

With today’s problem of Global Emission and rise in Greenhouse gas, they way how

economy depends on conventional sources of energy must change. To solve this problem

several governments and NGOs are shifting focus on green and renewable technology. One

of several clean energy companies, Nel Hydrogen ASA is a Norwegian company

manufacturing technology, plants, service and solution focused on production of Hydrogen

using renewable source of energy.

Aim of this this study is to fairly value Nel Hydrogen equity using three stage DCF-model

through weighted average cost of capital. Several assumptions are made based on its

historical performance and thorough analysis of fuel cell industry and markets. Its market

positioning is in strong position due to its long expertise and control of value chain. It is a

fast-growing company with high growth ambition and fulfilling it by two major acquisition

in 2015 and 2017.

Estimation of its future free cashflows and Net Present value shows that Nel Hydrogen

equity is not fairly priced in the market. DCF three stage model price its share at Kr 10,06

whereas market price is Kr 2.99. Relative valuation using EV/Revenue multiple supports the

DCF estimates. But sensitivity analysis reveals that the company is highly sensitive to

growth rate and discount rate. Study concludes that one should invest in Nel hydrogen to get

good return in the future.