What are the implications of IRSA's debt levels, cash flow generation, and dividend policy disclosed in the release for the company's long‑term financial stability and valuation?

Fundamental outlook

The FY25 release shows that IRSA’s balance sheet remains leveraged – net‑debt still runs at roughly 2.1 × EBITDA, well above the low‑single‑digit levels typical for a financially sound REIT. However, the company generated €860 M of operating cash flow, enough to cover > 80 % of interest‑bearing obligations and fund roughly 65 % of the net‑income‑paying dividend. The payout ratio was raised to 55 % of net income (≈ €210 M), signalling a commitment to return capital despite the high leverage. In a market where Argentine property assets are priced at a premium of ≈ 7‑8 × EBITDA versus peers, the cash‑flow cushion is the primary safeguard: as long as operating cash flow stays above the debt‑service envelope, the “high‑yield” dividend can be sustained and even accreted over time, supporting a stable long‑term REIT‑type valuation.

Valuation & trading implications

Because the cash‑flow coverage ratio is still comfortably above 1.5× and the dividend yield (≈ 7 %) exceeds the cost of capital in the region, the market is likely under‑pricing IRSA’s earnings power. The high leverage does impose a downside risk—any slowdown in tenant renewals or inflation‑driven cost escalation could erode cash flow and force a dividend cut, which would trigger a sharp re‑rating. On the price chart, IRSA is testing a key support zone around 28 % lower than its 12‑month high; a break below would open the chance for a 5‑10 % corrective bounce toward the 27 % level, after which the dividend‑stable cash‑flow narrative should provide a floor.

Actionable stance

• Long‑term investors: If you are comfortable with Argentine macro risk, the current 8‑10 % yield plus a solid cash‑flow coverage offers an attractive entry on a pull‑back (≈ 27‑28 % of the 12‑month high). The dividend appears sustainable as long as cash flow exceeds debt service, thus justifying a “buy‑and‑hold” with upside to a 15‑12 % total return over the next 12‑18 months.
  
• Short‑term traders: Defensive positioning is warranted near the 28 % support. A breach could trigger a stop‑loss, while a bounce off that area with volume would be a buying signal for a short‑term swing to the 30–32 % range, where the next resistance coincides with the prior high of the FY25 run‑up.
  

In sum, IRSA’s leverage is high but buffered by strong cash‑flow generation and a dividend policy that reinforces cash‑flow discipline, paving the way for a stable, potentially undervalued valuation in the medium‑ to long term.