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 worth.
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 web 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% improve 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 web 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 worth.
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 web 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 web debt of $1.73 billion a 12 months earlier to web money of $650.8 million.
The firm reported money holdings of $6.69 billion throughout 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% increased 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, somewhat than decrease working prices, had been the principle driver of the stronger efficiency.
However, RCA famous that crude oil value lags and hedging actions might also have contributed to the outcomes.
Refining margins surge throughout key markets
RCA attributed the refinery’s earnings outperformance to a pointy improve in refining cracks throughout the third quarter, significantly throughout the Atlantic Basin.
US Gulf Coast jet gas 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 very best in RCA’s information 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, sturdy 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 gas accounted for 86% of its second-quarter product yield.
RCA famous that about 88% of the refinery’s June jet gas output exceeded Nigeria’s home demand and was offered to worldwide consumers. The agency additionally stated Dangote Refinery reported that it was Europe’s largest jet gas 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 web earnings 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 web earnings 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 average.
- 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 term.
The agency stated solely about 8.5% of the N80.94 per-share improve in its valuation got here from adjustments to its 2026 forecasts. The remaining improve mirrored the refinery’s web money place, a later valuation date and changes to exchange-rate and discount-rate assumptions.
IPO worth beneath peer valuation
At the N525 provide worth, RCA estimated Dangote Refinery’s pre-listing market capitalisation at N63.07 trillion, equal to $47.22 billion at an alternate fee of N1,335.50 to the greenback.
- After deducting web money, the provide worth 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 practice shall be commissioned in January 2030, growing capability from about 700,000 barrels per day to roughly 1.4 million barrels per day.
- Management is focusing on start-up in 2029, with growth capital expenditure estimated at about $14.3 billion, partly to be funded via IPO proceeds.
- RCA estimated that commissioning the second practice in 2029 would elevate its valuation to N731.80 per share, whereas a delay till 2031 would scale back it to N671.83 per share.
The agency cautioned that the refinery’s newest outcomes announcement supplied 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 complete nine-month accounts are revealed.
Key dangers to valuation
RCA recognized refining margins, taxation and international alternate actions as key components that might 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 supplied for.
Foreign alternate 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 info functions solely, was not impartial funding analysis and didn’t represent a advice to purchase or promote securities.
