Dangote Cement Plc has received a major vote of confidence from investment analysts at Cordros Capital Limited following a stronger-than-expected recovery in cement volumes across its Nigerian and Pan-African operations in Q1 2026.
In its latest equity research update, Cordros Research revised its 2026 earnings expectations for Dangote Cement, citing improving macroeconomic conditions, increased fiscal spending, stronger construction activities, and rising export demand across key African markets.
The investment firm raised its 2026 group volume forecast to 30.96 million tonnes from an earlier projection of 29.66 million tonnes, reflecting renewed momentum in the cement giant’s core markets.
According to the report, Nigerian operations are now expected to contribute 18.53 million tonnes, up from the previous estimate of 17.77 million tonnes. In comparison, Pan-African operations are projected to deliver 12.42 million tonnes, compared to the earlier forecast of 11.89 million tonnes.
The stronger volume outlook has also prompted analysts to revise revenue growth expectations upward to 19.7 per cent year-on-year for 2026, from an earlier estimate of 16.3 per cent growth.
Cordros further increased its earnings forecast for the cement producer, projecting earnings per share (EPS) at ₦82.94, compared to its earlier estimate of ₦77.02, while EBITDA margin expectations were slightly upgraded to 46.9 per cent from 46.5 per cent.
Following the improved outlook, the research house raised Dangote Cement’s target share price to ₦1,077.80 per share from ₦850.80 previously, while maintaining a “Hold” recommendation on the stock.
The analysts noted that Dangote Cement currently trades at a 2026 estimated price-to-earnings ratio of 14.2x and an EV/EBITDA multiple of 8.3x, compared with Middle East and Africa peer averages of 16.1x and 8.9x respectively, suggesting the company still retains relative valuation support despite recent market gains.
Stronger Construction Activities Support Growth
Cordros attributed the improved projections primarily to rising cement demand driven by expanding infrastructure projects and improving economic conditions across Nigeria and other African markets.
The report stated that although average realised prices were slightly moderated in the latest assumptions, the anticipated surge in sales volumes would more than offset pricing adjustments.
For Nigeria, analysts now expect revenue growth of 17.9 per cent year-on-year, supported by stronger cement dispatch volumes and improved domestic pricing dynamics.
Average cement prices in Nigeria are projected to rise by 13.3 per cent to about ₦188,000 per tonne, while Pan-African operations are expected to post revenue growth of 14.7 per cent despite softer pricing conditions across several regional markets.
Across the wider African business, average realised prices are forecast to rise modestly by 1.1 per cent year-on-year to approximately ₦134,000 per tonne as competition intensifies in key markets.
Rising Costs Still Threaten Pan-African Margins
Despite stronger revenue expectations, Cordros warned that profitability pressures may persist across Dangote Cement’s Pan-African business due to elevated energy, freight, and distribution costs.
The report projects Pan-African EBITDA to decline by 9.7 per cent year-on-year in 2026, with EBITDA margins expected to contract by 430 basis points to 15.9 per cent.
Analysts noted that tougher competitive conditions in several African markets continue to limit the company’s ability to fully transfer rising operating costs to consumers, unlike the Nigerian market where pricing power remains stronger.
Nonetheless, the group’s overall EBITDA margin is still projected to improve to 46.9 per cent, largely supported by stronger profitability in Nigeria where margins are expected to expand by over 200 basis points to 61.7 per cent.
Cordros also forecast a 13.9 per cent decline in net finance costs, driven by lower debt levels and improving balance sheet conditions.
Valuation Anchored on DCF and Peer Multiples
Cordros said its revised target price of ₦1,077.80 per share was derived using a 50:50 blend of discounted cash flow valuation and sector-relative valuation models.
The valuation incorporated weighted average cost of capital assumptions of 18.7 per cent, cost of equity at 20.7 per cent, and a terminal growth rate of 4 per cent.
Under its valuation framework, the research firm estimated fair value ranges of ₦938.17 per share using free cash flow to firm methodology and ₦788.92 per share using free cash flow to equity estimates.
Meanwhile, peer-based valuation estimates produced implied values of ₦1,248.80 per share using EV/EBITDA multiples and ₦1,335.33 per share using price-to-earnings comparisons against regional peers.
Cordros maintained that while the stock’s fundamentals remain solid, the current market valuation justifies retaining a “Hold” recommendation pending further upside catalysts.
Dangote Cement’s Q1 2026 performance has prompted Cordros Research to raise its target price to ₦1,077 per share amid stronger cement volumes, rising construction demand, and improving African market conditions.
Discover more from Ameh News
Subscribe to get the latest posts sent to your email.
