By Brazil Stock Guide – Brazil’s fuel distribution sector closed the fourth quarter of 2025 on a stronger footing, supported by a more benign competitive environment and domestic diesel prices remaining below import parity for most of the period, according to a 4Q25 preview report published by XP Inc.. The brokerage raised its price target for Vibra Energia (VBBR3) to R$34 per share and reiterated a Buy rating, while lifting the target for Ultrapar (UGPA3) to R$28 and maintaining a Neutral recommendation.
XP said Vibra remains its preferred name in the sector due to stronger free cash flow yields, estimated at around 11% in 2026 and 14% in 2027, versus roughly 9% and 11%, respectively, for Ultrapar. The upward revision in price targets reflects mainly lower discount rates amid a compression in the equity risk premium. XP added that further declines in real interest rates could unlock additional upside to fair values.
In its sector preview, XP estimates that fuel distributors benefited from extraordinary margin gains in 4Q25, as limited competitiveness from imported products allowed companies with large and secure supply contracts with Petrobras to capture higher spreads. Vibra’s EBITDA margin is projected at R$171 per cubic meter, up from R$159/m³ in 3Q25, while Ipiranga’s margin is seen at R$157/m³, compared with R$145/m³ in the prior quarter. Enforcement actions against illegal operators, including the shutdown of the Refit refinery, also supported market share gains for major distributors.
For Vibra, XP forecasts 4Q25 EBITDA of R$1.9 billion, up 13% quarter-on-quarter and 37% year-on-year. The estimate includes R$1.6 billion from fuel distribution and a positive contribution of R$250 million from Comerc. XP expects Vibra to reach Comerc’s full-year EBITDA-at-stake guidance of R$1.05–1.15 billion in 2025. Net income is projected at R$769 million, representing an 85% sequential increase.
For Ultrapar, XP estimates EBITDA excluding HBSA of R$1.6 billion in the quarter, up 10% sequentially and 13% year-on-year, driven mainly by Ipiranga’s expected EBITDA of R$1.0 billion. Net income is projected at R$576 million, down both quarter-on-quarter and year-on-year. XP also sees sequential improvement at Ultragaz despite weaker volumes, while Ultracargo benefits from stronger fuel import demand, particularly gasoline.
Looking ahead, XP highlighted near-term catalysts such as sustained benign competitive dynamics—typically associated with Petrobras pricing remaining below import parity—and continued progress in curbing illegal practices in the sector. Key risks include persistently high interest rates, unfavorable conditions for M&A transactions, and long-term uncertainty over demand for liquid fuels amid electrification and the energy transition.
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