Renaissance Capital Africa (RCA) has raised its valuation of Dangote Petroleum Refinery and Petrochemicals to ₦700.41 per share, a 13.1 per cent increase from its previous estimate of ₦619.47, following stronger-than-expected earnings and improved refining margins.
The revised valuation is 33.4 per cent above the refinery’s initial public offering (IPO) price of ₦525 per share, reflecting improved profitability in the first nine months of 2026.
In an update dated October 16, titled “Stronger Refining Margins Drive Earnings Outperformance”, RCA said the refinery’s revenue, earnings before interest, taxes, depreciation and amortisation (EBITDA), and net profit for the nine months ended September 2026 exceeded its estimates.
Dangote Refinery recorded revenue of $22.48 billion during the period, representing a 144.5 per cent increase from a year earlier. Net profit reached $4.73 billion, reversing a loss of $117.2 million in the corresponding period of 2025.
EBITDA also climbed to $5.52 billion from $627.6 million, supported by higher crude processing volumes, stronger refining margins and improved operational performance.
The company’s financial position strengthened as well, moving from net debt of $1.73 billion a year earlier to net cash of $650.8 million. It ended September with cash holdings of $6.69 billion.
Strong refining margins boost earnings
RCA attributed much of the earnings outperformance to the third quarter, when international refining margins rose sharply, particularly for diesel and jet fuel.
Revenue for the quarter reached $8.57 billion, 19.7 per cent above the investment firm’s estimate. EBITDA rose to $2.92 billion, compared with its forecast of $1.50 billion.
The refinery’s EBITDA margin expanded to 34.1 per cent in the third quarter, up from 18.7 per cent in the first half of the year.
In Rotterdam, a benchmark RCA considers relevant to the refinery’s Brent-linked crude supply, the average refining margin increased to $42.51 per barrel in the third quarter from $24.50 in the previous quarter.
Margins for jet fuel and gasoil on the US Gulf Coast also increased, supporting profitability as demand for refined products strengthened amid international supply disruptions.
RCA noted that operating costs remained broadly in line with its estimates, suggesting that stronger refining margins, rather than lower costs, accounted for much of the improved performance. It added that crude oil cost timing and hedging activities may also have contributed.
Valuation and IPO implications
After adjusting for the expected IPO proceeds and the issuance of 4.1 billion new shares, RCA’s valuation stands at ₦694.28 per share, representing a 32.2 per cent premium to the ₦525 offer price.
At the offer price, RCA estimates the refinery’s pre-listing market capitalisation at ₦63.07 trillion, equivalent to approximately $47.22 billion.
The investment firm’s revised assessment points to potential upside relative to the IPO price, although the valuation remains dependent on refining margins, expansion plans and future cash flows. It is an analyst estimate, not a guarantee of investment returns.
RCA said it would revisit its forecasts when the refinery publishes its full nine-month accounts, noting that the latest earnings announcement did not include detailed production volumes, realised prices or a breakdown of costs below EBITDA.
The refinery’s performance has strengthened its financial outlook ahead of its planned public listing, while its ability to sustain elevated margins and execute its expansion programme will remain important factors in determining its longer-term value.
