Dangote Refinery: Investment Bank Upgrades Stock to ‘Buy’, Raises Fair Value to N836.80
Standard Investment Bank has upgraded Dangote Petroleum Refinery and Petrochemicals from ‘Hold’ to ‘Buy’, raising its fair value estimate by 39 per cent to N836.80 per share on improved earnings prospects and stronger refining margins.
According to Kenya Wall Street, the revised valuation represents a potential 59.4 per cent gain from the refinery’s initial public offering (IPO) price of N525 per share. This is a significant increase from the 14.7 per cent upside projected in the bank’s September assessment.
The upgrade reflects expectations of stronger preliminary third-quarter earnings, improved fuel yields and lower crude oil input costs, which could strengthen the refinery’s profitability and cash flow.
Higher fuel yields would enable the refinery to produce more valuable petroleum products from each barrel of crude oil processed, while lower feedstock costs could reduce operating expenses and improve refining margins.
In its September assessment, Standard Investment Bank valued the refinery at N602.18 per share. The estimate was based on two valuation methods: a discounted cash flow valuation of N684.22 per share and a peer comparison valuation of N520.14 per share, each accounting for 50 per cent of the final estimate.
The latest revision signals improved confidence in the refinery’s earnings potential, although the projected upside remains dependent on its financial performance, operating costs and prevailing market conditions.
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