BRASKEM SA (BAK): what the price requires
The current priced-in claim for BRASKEM SA (BAK) is temporarily suppressed because the live engine record is unavailable. The dated report remains a snapshot, not a current market read.
Generated: 2026-07-19 · Exported: 2026-07-20 · Source: https://boothcheck.com/report/BAK
Headline
| Field | Value |
|---|---|
| Ticker | BAK |
| Company | BRASKEM SA |
| Sector / Industry | Basic Materials / Chemicals |
| Current price | $2.46/sh |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 4.6% |
| Operating margin (mid-cycle) | 8.5% |
| Margin compression implied | -3.9pp |
| Trailing margin (depressed year) | -1.4% |
| Multiple paid | 7x mid-cycle operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
The price sits below what even a 5%/yr operating-profit decline would warrant; the inversion reports a bound, not a solved growth path.
Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 4.1% sits below it).
How unusual the bet is: within-range (limited comparison data)
| Reference | Value |
|---|---|
| vs own history | +1.03σ |
| implied end-window share | 0% |
Valuation X-Ray
The price is supported by earnings-power and relative-multiple and growth-DCF value. A value/asset-supported name, not a pure growth bet.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | — | 0 | — |
| Earnings | 0.17x | 1 | justifies |
| Relative | 0.09x | 2 | justifies |
| Growth | 0.13x | 3 | justifies |
Families that justify the price: Earnings, Relative, Growth
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.3%); the inversion above states its own rate.
Per-Model Detail (n=6)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $18.68 | 0.13x | yes | Reference only (OCF-based, capex excluded): OCF $0.5B |
| DCF Exit Multiple | Growth | $0.00 | — | no | Negative/zero FCF or EBITDA — equity value floored at $0 |
| Relative Valuation | Relative | $28.60 | 0.09x | yes | P/S fallback (negative EPS): Sector P/S 1.5x × TTM revenue — excluded from consensus |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | — | — | no | — |
| Two-Stage Excess Return | Asset | — | — | no | — |
| Discounted Future Market Cap | Growth | $2.36 | 1.04x | yes | Rev $15.2B, growth 14% (input: historical growth; tapered), Terminal P/S: 0.1x / 0.1x / 0.2x (bear / base = today's held flat / bull, cap 12x) |
| Peter Lynch Fair Value | Relative | $0.00 | — | no | Negative/zero EPS — earnings-based value floored at $0 |
| Margin Trajectory | Growth | $37.21 | 0.07x | yes | Margin ramp: -16% → 12% over 7yr, rev growth 14% (input: historical growth; tapered) |
| Earnings Power Value | Earnings | $14.79 | 0.17x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.03B × (1−21%) / WACC 9.3% → EPV (no growth) |
| Residual Income | Asset | — | — | no | — |
| Graham Number | Asset | — | — | no | — |
| EV/EBITDA Relative | Relative | — | — | no | — |
| FCF Yield | Earnings | — | — | no | — |
| SBC-Adj FCF Yield | Earnings | — | — | no | — |
| Ben Graham Formula | Earnings | — | — | no | — |
| ROIC-Justified P/B | Asset | — | — | no | — |
| P/Sales Sector | Relative | $28.60 | 0.09x | yes | Revenue $15.18B × sector P/S 1.5x |
| PEG Fair Value | Relative | — | — | no | — |
| Earnings Yield | Earnings | — | — | no | — |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $7.0b |
| Net debt / NOPAT (after-tax) | 7.05x |
| Net debt / operating income (pre-tax) | 5.57x |
| Interest coverage | 1.0x |
| Burning cash | no |
Leverage and coverage are computed on normalized mid-cycle operating income (mid-cycle margin 8.5%); the trailing year was depressed.
Bullet Takeaways
- Braskem, Brazil's largest petrochemical company, is the classic case of a sound set of plants trapped under an unsound balance sheet: at $2.46 (July 19, 2026) the equity is worth near $2.0 billion, a thin claim sitting behind roughly $7.0 billion of net debt now inside a court-supervised financial restructuring.
- The real risk is the capital structure, not the crackers: first-quarter 2026 shareholders' equity was negative about R$16.2 billion with a going-concern warning attached, and on June 29, 2026 S&P cut the corporate rating to D and Fitch to C.
- The next 60 days of court-protected creditor mediation, granted June 26, 2026, and the change of control to the Shine I funds advised by IG4, with its mandatory tender for the remaining shares, are what decide whether the equity survives the debt.
Bull Case
Read only the balance sheet and Braskem looks finished. Read the business and it is a working set of world-scale crackers and polymer plants that still moved about $15.2 billion of product in 2024 and generated positive operating cash flow that year, at the bottom of the worst petrochemical downturn in a generation. That is the gap the standard valuation models keep pointing at: they price the enterprise, and the enterprise is not what is broken. The financing is. A company can look deeply cheap on every measure of what it earns and owns and still be a hard bet, because here the cheapness and the danger have the same single cause, which is the debt.
Braskem is also not one business. Its Brazilian crackers run largely on naphtha, the cost-disadvantaged feedstock, but its United States polypropylene operations and its Mexican Idesa complex sit on ethane, where American producers hold a durable cost advantage over naphtha-based rivals. The consolidated trough numbers bury those advantaged pockets inside one ugly average. And the trough is punishing everyone on the cost curve, not Braskem alone: Dow ran an operating margin of just 0.4% in 2025 and LyondellBasell was outright negative at -1.4%, yet LyondellBasell still threw off billions in cash through the down cycle. Commodity petrochemicals are a cyclical business having a cyclical experience.
At $2.46 the equity is priced as an option, and two events give that option a shape. Control has passed to the Shine I funds advised by IG4, after Petrobras waived its preemptive rights in late April 2026, and the buyer undertook a mandatory tender for the remaining shares at the control terms. Separately, the June 2026 court-supervised mediation is a structured attempt to restructure the financial debt while suppliers and customers carry on unchanged. If that mediation de-levers the enterprise without erasing the shareholder, and industry capacity growth slows after 2026 as the sector's own forecasters expect, then the through-cycle earnings power the static methods keep pointing to would land on a very small equity base. That is the entire bull case. It is real, it is narrow, and it runs through a courtroom.
Bear Case
The valuation methods do not agree on Braskem, and the disagreement is the whole story. Stack the value lenses and they say the equity is absurdly cheap: earnings power, peer multiples on sales, and a growth DCF all sit well above the market price, which lands at roughly one-fifth of what the earnings power methods carry, near one-tenth of the peer multiple methods, and about one-seventh of the growth DCF methods. Exactly one approach dissents. A forward method that holds today's collapsed sales multiple flat and simply grows revenue lands within a hair of the current price. On a distressed, heavily indebted company, the dissenting method is the honest one, and it is worth being precise about why.
Every one of the cheap-looking methods values the enterprise, or normalizes a cyclical business through the cycle, and then hands the result to the shareholder. That handoff assumes the shareholder stands first in line. He does not. Shareholders' equity was negative about R$16.2 billion at the end of the first quarter of 2026, current liabilities exceeded total assets by roughly R$10.7 billion, and the auditors attached a going-concern warning. The methods that require a book value, the asset-based and residual-return approaches, do not even run here, because there is no positive book value left to run them on. A model that prices the plants while stepping over the debt stack that dwarfs them is pricing something the shareholder does not cleanly own.
So the price is low enough to sit below what even a 5 percent annual decline in operating profit would warrant, which reads as deep value until you see what carries the enterprise to that level. Even measured against mid-cycle operating income, the flattering frame, profit covers interest only about 1.3 times, and mid-cycle is generous when the industry's own analysts expect ethylene and polyethylene oversupply to persist through 2028 to 2029. Set Brazil's naphtha cost disadvantage next to roughly $7.0 billion of net debt that towers over the equity's market value, then add a court-supervised restructuring that by its nature renegotiates with the creditors ranking ahead of the equity, and the dissenting method starts to look less like pessimism and more like arithmetic. S&P rates the company D and Fitch C as of late June 2026. The rating agencies and the one honest model are reading the same balance sheet.
Valuation
Take today's price as given and work backward. The market values the whole company so cheaply that the price sits below what even a 5 percent annual decline in operating profit would warrant. In plain terms, the market is not asking Braskem to grow at all. It is pricing the equity as a residual claim that might not come through the debt stack intact.
Across the individual methods the picture is lopsided in a way worth reading carefully. The earnings power, peer multiple, and growth DCF families all sit well above the price, which lands at roughly one-fifth, one-tenth, and one-seventh of what those families respectively carry. The lone exception is a forward approach that holds today's depressed sales multiple flat and grows revenue, and it lands essentially at the current price. These are two honest lenses on the same equity that happen to disagree: the first group normalizes a cyclical producer through the cycle and credits the enterprise; the second takes today's trough pricing at face value and asks only what revenue growth by itself is worth. On a company whose book equity is negative and whose debt sits in mediation, the second lens is the one doing the conservative accounting. The chemicals sector trades at a low single-digit multiple of sales, while Braskem changes hands at a small fraction of its own $15.2 billion in revenue, which is what pulls the first group of methods so far above the price.
Solvency is not a footnote to the valuation here; it is the valuation. Net debt runs about $7.0 billion, several times the entire market value of the equity, so the plant base is financed far more by lenders than by shareholders. The income statement makes the same point from another angle: in 2024 the operating loss narrowed even as the net loss deepened, the difference sitting in financial expense and other non-operating items rather than in the plants themselves. The interest bill, not the crackers, is what the equity is fighting, which is precisely why a court is now involved.
Catalysts
The defining development at Braskem is financial, not operational. On June 24, 2026 the board approved a plan to restructure the company's financial debt through mediation, and on June 26 the Sao Paulo bankruptcy court granted a 60-day suspension of creditor enforcement actions under Brazil's restructuring law, with a potential Chapter 15 filing in the United States authorized as a backstop. The company stressed that the process reaches financial obligations only, with supplier and customer contracts continuing normally. Three days later, on June 29, S&P lowered the corporate rating to D and Fitch to C. The 60-day mediation window is the single most important stretch ahead for the equity.
Running alongside the restructuring is a change of control. In April 2026 Novonor agreed to sell its roughly 50.1% voting stake to the Shine I funds, vehicles advised by IG4, in a court-supervised transaction settled in debentures, and Petrobras decided in late April not to exercise its preemptive rights, which cleared the path. The acquirer undertook to launch a mandatory tender offer in Brazil for the remaining common and preferred shares at the same economic terms as the control deal. That undertaking matters for minority holders, though it is a Brazilian-market tender and its mechanics for the New York-listed shares are a separate question.
The Alagoas geological liability, the ground subsidence in Maceio tied to decades of rock-salt mining, is now largely provisioned rather than open-ended. Over the life of the matter Braskem has recognized more than R$18 billion for it, the bulk of which has already been paid or reclassified, and the provision still outstanding stood at about R$3.367 billion at the end of the first quarter of 2026. A R$1.2 billion settlement with the State of Alagoas was judicially approved in January 2026, payable in installments weighted after 2030. Operationally, the trough may be starting to turn: first-quarter 2026 recurring EBITDA rose about 76% to roughly US$192 million. It is a genuine improvement, and it is a small figure against the debt, which is the tension this whole report turns on.
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Braskem Q1 2026 6-K · Braskem disclosure, June 29 2026 · Braskem 6-K, June 2026 · Braskem FY2024 20-F · Wood Mackenzie 2026 chemicals outlook · Dow FY2025 10-K; LyondellBasell FY2025 10-K · Braskem and Novonor announcements, 2026 · ICIS 2026 · Braskem Q1 2026 results