Valuation criteria for emerging market value oil & gas stocks (Brazil, India). FCF yield 8-15%, sovereign risk assessment, Petrobras (27.8% FCF yield) vs ONGC analysis, and currency conversion risk.
Method: FCF Yield + Sovereign Risk Assessment + Currency Risk
| Metric | DM Target | EM Target | Risk Factor |
|---|---|---|---|
| FCF Yield | 6-10% | 8-15% | Higher risk = higher required return |
| Dividend Yield | 4-8% | 6-12% | Political risk premium |
| Cost per Barrel (TAC) | Competitive | Advantaged | Brazil/India often lower cost |
| Debt/EBITDA | <2.0x | <2.5x | Higher leverage acceptable |
| Currency Risk | - | -5-10% additional adjustment | FX conversion/control risk |