Renaissance Capital Africa has raised its valuation of Dangote Petroleum Refinery and Petrochemicals FZE by 33.4 per cent to ₦700.41 per share from its preliminary public providing (IPO) worth of ₦525 per share.
In a press release issued on Sunday, the funding financial institution stated the upward revision displays the refinery’s sturdy earnings efficiency within the first 9 months of 2026.
“Revenue, EBITDA and net profit all exceeded the firm’s expectations during the period,” the assertion stated.
In its 16 October replace, titled “Stronger Refining Margins Drive Earnings Outperformance,” Renaissance Capital Africa recognized sturdy refining margins and stronger working outcomes as the primary drivers of the revised valuation.
The improved valuation comes amid rising investor curiosity within the refinery, following its current sturdy operational and monetary efficiency.
Last week, PREMIUM TIMES reported that the refinery recorded a internet revenue of $4.7 billion within the first 9 months of 2026, in contrast with a internet lack of $117.2 million within the corresponding interval of 2025, in accordance to its newest unaudited outcomes.
“Revenue grew by 144 per cent from $9.2 billion, while EBITDA increased nearly nine-fold to $5.5 billion from $627.6 million. Operating cash flow rose more than ten-fold to $3.68 billion, underscoring the refinery’s growing ability to generate substantial earnings and cash flow from its operations,” the assertion stated.
In the 9 months to September, the refinery strengthened 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.
According to Renaissance Capital Africa, the shift displays improved liquidity and better monetary resilience.
Analysts query valuation
The revised valuation diverges from the view of some analysts who take into account the continued share worth of ₦525 per share costly, given the uncertainties surrounding the refinery’s enlargement 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 agency Vestance, described the refinery’s monetary efficiency as a major turnaround however warned that the upper valuation may create unrealistic expectations amongst retail traders.
“Recording a profit in H1 2026 after a loss in 2025 is no small achievement. But a valuation that lands well above the ₦525 offer price risks giving retail investors false hope. It reads as a margin of safety when it is mostly a bet on outcomes that have not happened yet,” he stated.
Mr Fatai questioned the assumptions behind the valuation, notably the refinery’s deliberate capability enlargement.
He stated a lot of the projection relies on the refinery doubling its capability to 1.4 million barrels per day by 2029, a challenge estimated to price about $14 billion.
According to him, the enlargement may face vital challenges, together with crude provide constraints, overseas change pressures, financing prices, and delays usually related to large-scale industrial tasks.
“In a DCF, every year of delay erodes value, and Rencap’s own team acknowledges that expansion timing affects the valuation. Treating Phase 2 as near-certain moves future capacity into today’s price,” he stated.
A reduced money stream (DCF) valuation estimates an organization’s price by projecting its future money flows and discounting them to their current worth.
Mr Fatai additionally expressed reservations concerning the sustainability of the refinery’s present margins, arguing that the disruption related to the US conflict towards Iran had created unusually beneficial situations 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 rise to $27.50 per barrel in 2026, from $24 per barrel within the first half of the yr.
“These are crisis-level crack spreads, not a steady state,” he stated, warning that margins may decline if the battle de-escalates and international refining output normalises.
Mr Fatai added that the identical geopolitical tensions supporting greater product margins may additionally improve crude procurement and transport prices whereas exposing the refinery to better provide dangers.
“If a temporary windfall is extrapolated into terminal value, future cash flows will be overstated,” he stated.
Mr Fatai additionally urged traders to take into account the potential limitations of the analysis studies produced by the corporations concerned within the share provide.
He famous that Renaissance Capital, Chapel Hill Denham and CardinalStone are joint issuing homes for the provide, arguing that traders ought to evaluate their assessments with impartial valuations.
He cited an evaluation by GTI Capital, which reportedly places the refinery’s honest worth at about ₦493 per share and describes the provide worth as totally valued.
Mr Fatai stated the refinery may very well be a superb enterprise with out essentially representing a gorgeous funding at its present valuation.
He suggested traders to check the valuation towards three situations: a return to regular refining margins, delays to the deliberate enlargement and a weaker naira.
Investors, he stated, ought to keep away from relying solely on headline fair-value estimates based mostly on essentially the most beneficial assumptions.
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