Renaissance Capital Africa (RCA) has raised its valuation of Dangote Petroleum Refinery and Petrochemicals FZE to N700.41 in step with proportion, representing a 33.4% top class to the N525 IPO be offering value.
The upward revision follows stronger-than-expected income for the 9 months ended September 2026, because the refinery’s income, income ahead of pastime, taxes, depreciation and amortisation (EBITDA), and web benefit exceeded the funding company’s estimates.
That is consistent with an organization replace dated October 16, 2026, titled “More potent refining margins pressure income outperformance.”
Building up from previous valuation
The brand new valuation represents a 13.1% build up from RCA’s previous estimate of N619.47 in step with proportion and implies an fairness price of $63 billion according to 120.13 billion current stocks.
- “The result’s an upward revision of DCF price via 13.1% to NGN700.41/proportion, 33.4% above the NGN525 be offering value.”
Alternatively, after accounting for web IPO proceeds of N2.11 trillion and four.1 billion new stocks, RCA’s valuation stands at N694.28 in step with proportion, representing a 32.2% top class to the be offering value.
9-month benefit rises to $4.73 billion
Dangote Refinery reported a net profit of $4.73 billion for the nine months ended September 30, 2026, reversing a web lack of $117.2 million recorded within the corresponding length of 2025.
- Earnings greater via 144.5% year-on-year to $22.48 billion, exceeding RCA’s estimate of $21.07 billion.
- EBITDA rose to $5.52 billion from $627.6 million a yr previous, surpassing RCA’s forecast of $4.10 billion. The EBITDA margin additionally widened to 24.6% from 6.8%.
Internet benefit exceeded RCA’s estimate of $2.82 billion, whilst the refinery’s monetary place progressed from web debt of $1.73 billion a yr previous to web money of $650.8 million.
The corporate reported money holdings of $6.69 billion all over the length.
3rd-quarter efficiency drives income outperformance
RCA mentioned the income outperformance was once in large part pushed via the 1/3 quarter, when income reached $8.57 billion, 19.7% above its estimate.
- EBITDA stood at $2.92 billion, 94.8% upper than RCA’s forecast of $1.50 billion. The quarterly determine additionally exceeded the $2.60 billion recorded within the first part of the yr.
- The EBITDA margin rose to 34.1% within the 1/3 quarter, in comparison with 18.7% within the first part.
Money running prices of $5.65 billion have been inside of 0.2% of RCA’s estimate, suggesting that progressed refining margins, quite than decrease running prices, have been the principle motive force of the more potent efficiency.
Alternatively, RCA famous that crude oil price lags and hedging actions might also have contributed to the effects.
Refining margins surge throughout key markets
RCA attributed the refinery’s income outperformance to a pointy build up in refining cracks all over the 1/3 quarter, in particular around the Atlantic Basin.
US Gulf Coast jet gasoline and gasoil cracks averaged $75.59 and $72.57 in step with barrel, respectively, in comparison with $56.40 and $44.40 in the second one quarter.
- The USA Gulf Coast refining margin reached $62.08 in step with barrel in September, the best in RCA’s knowledge sequence, which started in July 2025.
- In Rotterdam, which RCA considers the nearest benchmark for Dangote Refinery’s Brent-linked crude, the common refining margin greater to $42.51 in step with barrel within the 1/3 quarter from $24.50 within the previous quarter.
- RCA cited the Organisation of the Petroleum Exporting Nations (OPEC) as attributing the rally to tight provides of center distillates around the Atlantic Basin.
- Elements supporting the rise incorporated provide losses in Japanese Europe, sturdy US diesel exports to Europe, low inventories and refinery upkeep.
- Dangote Refinery is located to take pleasure in the more potent margins, as petrol, diesel and jet gasoline accounted for 86% of its second-quarter product yield.
RCA famous that about 88% of the refinery’s June jet gasoline output exceeded Nigeria’s home call for and was once offered to global patrons. The company additionally mentioned Dangote Refinery reported that it was once Europe’s biggest jet gasoline provider in July and August.
RCA raises 2026 income forecasts
Following the more potent effects and progressed refining margins, RCA raised its full-year 2026 gross refining margin forecast to $35.81 in step with barrel from $27.55.
The funding company additionally greater its income forecast via 7.4% to $30.24 billion and raised its EBITDA projection via 34.6% to $7.24 billion.
- Its web source of revenue forecast greater via 47.4% to $5.32 billion on a run-rate foundation. The usage of reported nine-month benefit and its fourth-quarter estimate, RCA projected full-year web source of revenue of $5.98 billion.
- The revised forecasts indicate fourth-quarter EBITDA of $1.72 billion, 41% beneath the third-quarter determine, because the company expects refining cracks to average.
- RCA left its 2027 to 2029 refining margin and EBITDA forecasts unchanged, noting that it didn’t need to extrapolate height margins over the long run.
The company mentioned handiest about 8.5% of the N80.94 per-share build up in its valuation got here from adjustments to its 2026 forecasts. The rest build up mirrored the refinery’s web money place, a later valuation date and changes to exchange-rate and discount-rate assumptions.
IPO value beneath peer valuation
On the N525 be offering value, RCA estimated Dangote Refinery’s pre-listing marketplace capitalisation at N63.07 trillion, an identical to $47.22 billion at an replace fee of N1,335.50 to the buck.
- After deducting web money, the be offering value implies an endeavor value-to-EBITDA a couple of of 6.43 instances estimated 2026 income and seven.31 instances projected 2027 income.
- Each multiples are beneath the 7.74 instances weighted moderate for RCA’s refining trade friends.
- RCA’s personal valuation, then again, implies a a couple of of 8.61 instances 2026 EBITDA, a top class to friends that the company attributes to Dangote Refinery’s scale and coffee money running prices.
Control estimates money running prices at between $2.40 and $2.50 in step with barrel.
Growth timeline may impact valuation
RCA’s base-case valuation assumes the refinery’s moment teach might be commissioned in January 2030, expanding capability from about 700,000 barrels in step with day to roughly 1.4 million barrels in step with day.
- Control is focused on start-up in 2029, with growth capital expenditure estimated at about $14.3 billion, in part to be funded via IPO proceeds.
- RCA estimated that commissioning the second one teach in 2029 would elevate its valuation to N731.80 in step with proportion, whilst a prolong till 2031 would scale back it to N671.83 in step with proportion.
The company cautioned that the refinery’s newest effects announcement equipped headline monetary figures with out main points on manufacturing volumes, realised costs or a breakdown of prices beneath EBITDA.
It mentioned it will revisit its estimates when the overall nine-month accounts are printed.
Key dangers to valuation
RCA recognized refining margins, taxation and foreign currencies actions as key components that would impact its valuation.
- The company described the Heart East struggle as the most important swing issue for refining margins, noting that an easing of tensions may purpose refining cracks to fall. It additionally highlighted the significance of terminal price, which accounts for 72.1% of endeavor price, making the valuation closely depending on how lengthy increased margins persist.
- On taxation, RCA assumes an efficient tax fee of 12.1%, beneath the 15% minimal fee control has equipped for.
Foreign currencies actions additionally pose a possibility. RCA estimated that each and every 1% motion within the naira would exchange its naira-denominated valuation via roughly N7 in step with proportion.
The file mentioned that it was once for info functions handiest, was once no longer unbiased funding analysis and didn’t represent a advice to shop for or promote securities.