Delek Group Stock Poised for Significant Growth by 2029, Analysts Say
Delek Group, an Israeli energy and infrastructure conglomerate, is currently valued at approximately 15.9 billion shekels, but analysts project a potential doubling of its value by 2029. This optimistic outlook stems from the diversification of Delek's assets beyond its core energy holdings, which include the significant Leviathan and Ithaca Energy assets. The company has expanded into financial services through Isracard, real estate development via Madrin, and telecommunications with the acquisition of Hot Mobile by Delek Israel.
In the second quarter, Delek Group reported a 26% increase in revenues to about 4.4 billion shekels and a 78% rise in net profit. The company is also set to receive substantial dividends from its subsidiaries, with approximately 334 million dollars (around 1 billion shekels) expected by the end of 2026. Current market valuations of Delek's assets suggest a Net Asset Value (NAV) of around 19.7 billion shekels, implying the stock is trading at a discount of about 19% or offers a 24% upside potential based on current asset prices.
Key growth drivers identified include the expansion of the Leviathan gas field, expected to increase production capacity by 77% by 2029, and the development of the Aphrodite gas field in Cyprus, with a significant export agreement to Egypt in place. Ithaca Energy's Rosebank project is slated to begin production in mid-2027, and further exploration opportunities exist. Isracard is undergoing a transformation, aiming to become a 'small bank,' and Madrin is shifting focus towards significant real estate development projects.
Despite these positive projections, risks remain, including fluctuations in energy prices, potential project execution delays, regulatory hurdles, and the need for substantial capital investment. The company's financial health is supported by a strong balance sheet, with plans to reduce debt significantly by 2029 through dividends from subsidiaries. The article presents three scenarios for 2029: conservative, realistic, and optimistic, with the realistic scenario suggesting a 125% upside potential for the stock.
