Renaissance Capital Africa (RCA) has raised its valuation of Dangote Petroleum Refinery and Petrochemicals FZE to N700.41 per share, representing a 33.4% premium to the N525 IPO provide value.
The upward revision follows stronger-than-expected earnings for the 9 months ended September 2026, because the refinery’s income, earnings earlier than curiosity, taxes, depreciation and amortisation (EBITDA), and internet revenue exceeded the funding agency’s estimates.
This is in accordance to an organization replace dated October 16, 2026, titled “Stronger refining margins drive earnings outperformance.”
Increase from earlier valuation
The new valuation represents a 13.1% enhance from RCA’s earlier estimate of N619.47 per share and implies an fairness worth of $63 billion primarily based on 120.13 billion current shares.
- “The result is an upward revision of DCF value by 13.1% to NGN700.41/share, 33.4% above the NGN525 offer price.”
However, after accounting for internet IPO proceeds of N2.11 trillion and 4.1 billion new shares, RCA’s valuation stands at N694.28 per share, representing a 32.2% premium to the provide value.
Nine-month revenue 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 internet lack of $117.2 million recorded within the corresponding interval of 2025.
- Revenue elevated by 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 12 months earlier, surpassing RCA’s forecast of $4.10 billion. The EBITDA margin additionally widened to 24.6% from 6.8%.
Net revenue exceeded RCA’s estimate of $2.82 billion, whereas the refinery’s monetary place improved from internet debt of $1.73 billion a 12 months earlier to internet money of $650.8 million.
The firm reported money holdings of $6.69 billion through the interval.
Third-quarter efficiency drives earnings outperformance
RCA stated the earnings outperformance was largely pushed by the third quarter, when income reached $8.57 billion, 19.7% above its estimate.
- EBITDA stood at $2.92 billion, 94.8% larger than RCA’s forecast of $1.50 billion. The quarterly determine additionally exceeded the $2.60 billion recorded within the first half of the 12 months.
- The EBITDA margin rose to 34.1% within the third quarter, in contrast with 18.7% within the first half.
Cash working prices of $5.65 billion had been inside 0.2% of RCA’s estimate, suggesting that improved refining margins, quite than decrease working prices, had been the primary driver of the stronger efficiency.
However, RCA famous that crude oil value lags and hedging actions can also have contributed to the outcomes.
Refining margins surge throughout key markets
RCA attributed the refinery’s earnings outperformance to a pointy enhance in refining cracks through the third quarter, significantly throughout the Atlantic Basin.
US Gulf Coast jet gasoline and gasoil cracks averaged $75.59 and $72.57 per barrel, respectively, in contrast with $56.40 and $44.40 within the second quarter.
- The US Gulf Coast refining margin reached $62.08 per barrel in September, the best in RCA’s knowledge sequence, which started in July 2025.
- In Rotterdam, which RCA considers the closest benchmark for Dangote Refinery’s Brent-linked crude, the common refining margin elevated to $42.51 per barrel within the third quarter from $24.50 within the previous quarter.
- RCA cited the Organisation of the Petroleum Exporting Countries (OPEC) as attributing the rally to tight provides of center distillates throughout the Atlantic Basin.
- Factors supporting the rise included provide losses in Eastern Europe, robust US diesel exports to Europe, low inventories and refinery upkeep.
- Dangote Refinery is positioned to profit from the stronger 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 demand and was bought to worldwide patrons. The agency additionally stated Dangote Refinery reported that it was Europe’s largest jet gasoline provider in July and August.
RCA raises 2026 earnings forecasts
Following the stronger outcomes and improved refining margins, RCA raised its full-year 2026 gross refining margin forecast to $35.81 per barrel from $27.55.
The funding agency additionally elevated its income forecast by 7.4% to $30.24 billion and raised its EBITDA projection by 34.6% to $7.24 billion.
- Its internet revenue forecast elevated by 47.4% to $5.32 billion on a run-rate foundation. Using reported nine-month revenue and its fourth-quarter estimate, RCA projected full-year internet revenue of $5.98 billion.
- The revised forecasts indicate fourth-quarter EBITDA of $1.72 billion, 41% beneath the third-quarter determine, because the agency expects refining cracks to reasonable.
- RCA left its 2027 to 2029 refining margin and EBITDA forecasts unchanged, noting that it didn’t need to extrapolate peak margins over the long run.
The agency stated solely about 8.5% of the N80.94 per-share enhance in its valuation got here from modifications to its 2026 forecasts. The remaining enhance mirrored the refinery’s internet money place, a later valuation date and changes to exchange-rate and discount-rate assumptions.
IPO value beneath peer valuation
At the N525 provide value, RCA estimated Dangote Refinery’s pre-listing market capitalisation at N63.07 trillion, equal to $47.22 billion at an trade fee of N1,335.50 to the greenback.
- After deducting internet money, the provide value implies an enterprise value-to-EBITDA a number of of 6.43 occasions estimated 2026 earnings and seven.31 occasions projected 2027 earnings.
- Both multiples are beneath the 7.74 occasions weighted common for RCA’s refining business friends.
- RCA’s personal valuation, nevertheless, implies a a number of of 8.61 occasions 2026 EBITDA, a premium to friends that the agency attributes to Dangote Refinery’s scale and low money working prices.
Management estimates money working prices at between $2.40 and $2.50 per barrel.
Expansion timeline may have an effect on valuation
RCA’s base-case valuation assumes the refinery’s second prepare can be commissioned in January 2030, rising capability from about 700,000 barrels per day to roughly 1.4 million barrels per day.
- Management is concentrating on start-up in 2029, with enlargement capital expenditure estimated at about $14.3 billion, partly to be funded by IPO proceeds.
- RCA estimated that commissioning the second prepare in 2029 would elevate its valuation to N731.80 per share, whereas a delay till 2031 would cut back it to N671.83 per share.
The agency cautioned that the refinery’s newest outcomes announcement offered headline monetary figures with out particulars on manufacturing volumes, realised costs or a breakdown of prices beneath EBITDA.
It stated it might revisit its estimates when the total nine-month accounts are revealed.
Key dangers to valuation
RCA recognized refining margins, taxation and overseas trade actions as key elements that would have an effect on its valuation.
- The agency described the Middle East battle as the biggest swing issue for refining margins, noting that an easing of tensions may trigger refining cracks to fall. It additionally highlighted the significance of terminal worth, which accounts for 72.1% of enterprise worth, making the valuation closely depending on how lengthy elevated margins persist.
- On taxation, RCA assumes an efficient tax fee of 12.1%, beneath the 15% minimal fee administration has offered for.
Foreign trade actions additionally pose a danger. RCA estimated that each 1% motion within the naira would change its naira-denominated valuation by roughly N7 per share.
The report said that it was for data functions solely, was not unbiased funding analysis and didn’t represent a suggestion to purchase or promote securities.
