Stock Analysis & Valuation PJSC Gazprom (GAZ.DE)

• Previous Close: €2.70
• Sector Valuation Confidence Level: Low

Valuation method	Value, €	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method	20.00	641
Graham Formula	131.20	4759

Strategic Investment Analysis

Company Overview

Public Joint Stock Company Gazprom (GAZ.DE) is a leading integrated energy company headquartered in Moscow, Russia. Specializing in the exploration, production, processing, storage, transportation, and sale of gas, gas condensates, and oil, Gazprom operates across multiple segments, including gas production, transportation, distribution, and refining, as well as electric and heat energy generation. The company owns the Unified Gas Supply System, a vast gas transmission network spanning approximately 175.2 kilometers with 254 compressor stations, reinforcing its dominance in Russia's energy sector. Gazprom also engages in crude oil production, refining, and petrochemical operations, making it a key player in global energy markets. With a strong foothold in both domestic and international markets, Gazprom plays a crucial role in supplying natural gas to Europe and Asia. Despite geopolitical challenges, the company remains a cornerstone of Russia's energy infrastructure, leveraging its extensive reserves and logistical capabilities to maintain its industry leadership.

Investment Summary

Gazprom presents a high-risk, high-reward investment opportunity due to its dominant position in the global natural gas market and extensive infrastructure. The company reported robust FY 2021 financials, with revenue of €10.24 trillion and net income of €2.16 trillion, supported by strong demand for natural gas. However, geopolitical risks, including sanctions and regulatory pressures, pose significant challenges. Gazprom's beta of 0.45 suggests lower volatility compared to the broader market, but its reliance on European markets and political exposure may deter some investors. The company's dividend yield, with a payout of €4.53 per share, could appeal to income-focused investors, but long-term sustainability remains uncertain amid shifting energy policies and geopolitical tensions.

Competitive Analysis

Gazprom's competitive advantage lies in its vast natural gas reserves, extensive pipeline infrastructure, and dominant market position in Europe and Asia. The company controls a significant portion of Russia's gas supply, giving it pricing power and logistical superiority. Its ownership of the Unified Gas Supply System ensures efficient transportation and distribution, reducing reliance on third-party networks. However, Gazprom faces increasing competition from liquefied natural gas (LNG) suppliers, such as U.S. and Qatari producers, which offer more flexible delivery options. Additionally, European energy diversification policies and renewable energy adoption threaten Gazprom's long-term demand outlook. The company's vertical integration—spanning production, transportation, and refining—provides cost efficiencies but also exposes it to regulatory and geopolitical risks. While Gazprom's scale and resource base are unmatched in Russia, its reliance on politically sensitive markets and lack of diversification into renewables could hinder future growth.

Major Competitors

• Equinor ASA (EQNR.OL): Equinor is a major European energy company with a strong focus on offshore oil and gas production, as well as renewable energy investments. Unlike Gazprom, Equinor has diversified into wind and solar energy, reducing its reliance on hydrocarbons. Its operations in the North Sea and LNG projects provide competitive advantages, but it lacks Gazprom's vast pipeline infrastructure. Equinor's commitment to sustainability may appeal to ESG-focused investors, but its smaller gas reserves limit its pricing power compared to Gazprom.
• Shell plc (SHEL.L): Shell is a global energy giant with a diversified portfolio, including oil, gas, LNG, and renewables. Its extensive LNG operations compete directly with Gazprom's pipeline gas in Europe and Asia. Shell's investments in low-carbon energy and technological innovation give it a strategic edge in the energy transition. However, Shell lacks Gazprom's control over vast pipeline networks, making it more dependent on market pricing. Shell's global presence provides resilience but also exposes it to geopolitical risks in multiple regions.
• TotalEnergies SE (TOTF.PA): TotalEnergies is another European energy major with significant gas and LNG operations, competing with Gazprom in key markets. The company has aggressively expanded into renewables and electricity, differentiating itself from Gazprom's fossil-fuel-heavy portfolio. TotalEnergies' LNG capabilities provide flexibility, but its lack of pipeline assets in Eastern Europe limits its market control compared to Gazprom. Its diversified energy mix reduces risk but also dilutes its focus on natural gas dominance.
• BP plc (BP.L): BP is transitioning toward renewable energy while maintaining a strong presence in oil and gas. Its LNG portfolio competes with Gazprom, particularly in Europe. BP's strategic shift toward low-carbon energy may position it better for long-term sustainability, but its reduced focus on gas infrastructure weakens its competitive stance against Gazprom. BP's global brand and technological investments are strengths, but it lacks Gazprom's resource dominance in natural gas.