Gazprom (GAZP): a metric-by-metric breakdown

Gazprom's multiples cannot be read the way a bank's or a retailer's are: the holding's profit is built from segments with different economics, and non-cash items — revaluations, impairments, foreign exchange differences — regularly land on the bottom line. That is why 2,07 for this stock is not a conclusion but a question: what made the denominator come out the way it did. The current values for the stock are gathered in the GAZP card, and the rest of this piece sets out the mechanism that explains why they look the way they do and not otherwise.

Why P/E is misleading here

P/E assumes that net profit describes a recurring result at least approximately. At Gazprom that condition is broken more often than it is met. Impairment of assets on export routes, revaluation of financial investments, foreign exchange differences on foreign-currency debt — all of this passes through profit but does not change the company's ability to pay. In years when such items are large, the multiple either collapses to an implausibly low level or drops into negative territory and loses its meaning.

Compare for yourself: 2,07 against 14,07 and 3,92. The gap between a commodity holding and a bank is explained not by one of them being "cheap" but by the different structure of their accounts. At Sberbank profit is an almost direct reflection of operating performance; at Gazprom it is what remains after a long chain of adjustments. Hence the practical rule: with this stock you look first at the lines above profit (revenue, EBITDA, debt, capital expenditure), and only then at P/E, as a cross-check rather than the main reference point. The values of these lines are taken from the financial reports section, where publications are tied to their disclosure dates.

A holding, not a gas company

The key distinction for the analysis: Gazprom is a group in which the gas business sits alongside an oil business (Gazprom Neft) and a power generation business. The segments live by different rules. Gas inside the country is sold at regulated tariffs, exports depend on the routes available and on the contract structure, oil trades against global benchmarks at a discount, and power generation delivers a stable but unspectacular margin.

It follows that an analysis of Gazprom cannot be reduced to the price of gas. In some periods the oil segment contributes noticeably more to consolidated profit than the gas segment, and the stock then effectively behaves like an oil story. That is exactly why a comparison with a pure oil producer is useful: the Rosneft breakdown shows what the same metrics look like when the company has, in essence, a single segment.

Capital expenditure and free cash flow

After 2022 export logistics were rebuilt: eastern routes and liquefied natural gas require new capacity, and capacity requires capital. The mechanism is simple — a heavy investment programme eats up operating cash flow, and free cash flow turns negative even with a decent EBITDA. For a shareholder this matters more than profit: in the end a dividend is paid in cash, not in an accounting line.

So the analysis looks at the pairing "operating cash flow minus capital expenditure" and, separately, at how the gap is covered: with debt, with asset sales or by cutting the programme. If the gap is covered with debt, the interest burden grows, and part of the future cash flow is already promised to creditors. The OFZ curve helps to set the yield on the debt against the yield on government bonds — it provides the reference point for the cost of money in the economy.

The dividend: which profit it is calculated from

Gazprom's dividend policy is tied not to accounting net profit but to adjusted profit: non-cash items — those same foreign exchange differences and impairments — are stripped out of the base. This explains a paradox that regularly throws readers off: reported profit can be large while the calculated dividend is modest, and vice versa.

The second mechanism is the leverage limit. The policy sets a threshold for the ratio of net debt to EBITDA; when it is exceeded, the board of directors is entitled to recommend a payout below the calculated one. In other words, the dividend here is not a formula but a decision taken with the formula as its basis. The board's recommendation and the shareholders' meeting decision are separated in time, and both dates can be seen in the events calendar, while declared payouts are in the dividend calendar.

Upcoming payouts across the market:

Tax is withheld from the dividend received; the procedure and rates are in 13%.

The tax surcharge as a separate factor

The gas segment is subject to increased levies through the mineral extraction tax, set by separate amendments to the Tax Code. Mechanically this is a deduction from EBITDA that depends neither on prices nor on the quality of management: it is set by law and changed by law. For the analysis this means that a valuation based on historical multiples understates the risk — past periods may have been calculated under a different tax regime.

The order of analysis

Step 1 — revenue and EBITDA by segment: work out which business is earning the money right now. Step 2 — operating cash flow against capital expenditure: whether any free cash is left. Step 3 — net debt to EBITDA: whether the company clears the threshold in the dividend policy. Step 4 — only now 2,07 and a check against comparable names from the list of stocks.

What this breakdown does not contain

There is no forecast here of export volumes and prices on the eastern routes: the contract terms are not fully disclosed, and any figure in this place would be guesswork. Nor is there an estimate of a "fair" price — a gap between the multiple and the industry average does not in itself say who is wrong, the market or the model. The terms used above are explained in the glossary.