Renaissance Capital Africa has raised its valuation of Dangote Petroleum Refinery and Petrochemicals FZE by means of 33.4 in keeping with cent to ₦700.41 in keeping with percentage from its preliminary public providing (IPO) value of ₦525 in keeping with percentage.
In a commentary issued on Sunday, the funding financial institution mentioned the upward revision displays the refinery’s robust profits efficiency within the first 9 months of 2026.
“Earnings, EBITDA and internet benefit all exceeded the company’s expectancies all the way through the length,” the commentary mentioned.
In its 16 October replace, titled “More potent Refining Margins Force Profits Outperformance,” Renaissance Capital Africa recognized tough refining margins and more potent running effects as the primary drivers of the revised valuation.
The enhanced valuation comes amid rising investor pastime within the refinery, following its fresh robust operational and fiscal efficiency.
Ultimate week, PREMIUM TIMES reported that the refinery recorded a internet benefit of $4.7 billion within the first 9 months of 2026, in comparison with a internet lack of $117.2 million within the corresponding length of 2025, in keeping with its newest unaudited effects.
“Earnings grew by means of 144 in keeping with cent from $9.2 billion, whilst EBITDA greater just about nine-fold to $5.5 billion from $627.6 million. Running money glide rose greater than ten-fold to $3.68 billion, underscoring the refinery’s rising talent to generate really extensive profits and money glide from its operations,” the commentary mentioned.
Within the 9 months to September, the refinery reinforced its stability sheet, transferring from a internet debt place of $1.73 billion as of September 2025 to a internet money place of $651 million.
Consistent with Renaissance Capital Africa, the shift displays progressed liquidity and larger monetary resilience.
Analysts query valuation
The revised valuation diverges from the view of a few analysts who believe the continued percentage value of ₦525 in keeping with percentage pricey, given the uncertainties surrounding the refinery’s growth plans and the sustainability of its present refining margins.
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Reacting to Renaissance Capital Africa’s valuation, Razaq Fatai, director of analysis and advisory at consultancy company Vestance, described the refinery’s monetary efficiency as an important turnaround however warned that the upper valuation may create unrealistic expectancies amongst retail traders.
“Recording a benefit in H1 2026 after a loss in 2025 is not any small fulfillment. However a valuation that lands smartly above the ₦525 be offering value dangers giving retail traders false hope. It reads as a margin of protection when it’s most commonly a gamble on results that experience now not took place but,” he mentioned.
Mr Fatai puzzled the assumptions at the back of the valuation, specifically the refinery’s deliberate capability growth.
He mentioned a lot of the projection depends upon the refinery doubling its capability to at least one.4 million barrels in keeping with day by means of 2029, a undertaking estimated to price about $14 billion.
Consistent with him, the growth may face vital demanding situations, together with crude provide constraints, foreign currency echange pressures, financing prices, and delays continuously related to large-scale business initiatives.
“In a DCF, annually of lengthen erodes cost, and Rencap’s personal crew recognizes that growth timing impacts the valuation. Treating Section 2 as near-certain strikes long term capability into nowadays’s value,” he mentioned.
A reduced money glide (DCF) valuation estimates an organization’s value by means of projecting its long term money flows and discounting them to their provide cost.
Mr Fatai additionally expressed reservations concerning the sustainability of the refinery’s present margins, arguing that the disruption related to the United States struggle towards Iran had created surprisingly beneficial stipulations for the sale of jet gasoline and diesel in markets dealing with provide shortages.
He famous that Renaissance Capital Africa expects the refinery’s gross refining margins to upward push to $27.50 in keeping with barrel in 2026, from $24 in keeping with barrel within the first part of the yr.
“Those are crisis-level crack spreads, now not a gentle state,” he mentioned, caution that margins may decline if the struggle de-escalates and international refining output normalises.
Mr Fatai added that the similar geopolitical tensions supporting upper product margins may additionally building up crude procurement and transport prices whilst exposing the refinery to bigger provide dangers.
“If a short lived providence is extrapolated into terminal cost, long term money flows will likely be overstated,” he mentioned.
Mr Fatai additionally suggested traders to believe the prospective boundaries of the analysis reviews produced by means of the corporations concerned within the percentage be offering.
He famous that Renaissance Capital, Chapel Hill Denham and CardinalStone are joint issuing properties for the be offering, arguing that traders must evaluate their exams with impartial valuations.
He cited an overview by means of GTI Capital, which reportedly places the refinery’s honest cost at about ₦493 in keeping with percentage and describes the be offering value as totally valued.
Mr Fatai mentioned the refinery might be a very good industry with out essentially representing a phenomenal funding at its present valuation.
He steered traders to check the valuation towards 3 situations: a go back to standard refining margins, delays to the deliberate growth and a weaker naira.
Buyers, he mentioned, must keep away from depending only on headline fair-value estimates in response to essentially the most beneficial assumptions.
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