….Research firm projects EPS to double to N6.47 in 2026 as lower finance costs, margin expansion and volume recovery strengthen profitability
Investment research firm Cordros Research has upgraded its recommendation on Nigerian Breweries Plc from “Hold” to “Buy”, citing a stronger earnings outlook, significantly lower finance costs, improving operational efficiency and a stronger balance sheet following the elimination of foreign currency-denominated debt.
The firm raised its target price for the brewer’s shares to N94.84 per share, up from N80.17, representing a 30.8 per cent upside from the current market price of N72.50.
The bullish outlook follows the company’s solid first-quarter 2026 performance, where revenue increased by 7.7 per cent year-on-year, driven primarily by improving sales volumes despite limited price increases. Earnings per share also climbed 25.6 per cent to N1.81, reflecting the company’s improving profitability.
Revenue Growth to Moderate as Consumer Spending Remains Weak
Cordros projects Nigerian Breweries’ revenue to grow by 12.9 per cent in 2026, slower than the 35.3 per cent growth recorded in 2025, as inflationary pressures continue to weigh on consumer purchasing power.
However, analysts believe future growth will increasingly come from recovering product volumes and improved sales of premium brands rather than aggressive price increases.
The report noted that while consumer demand remains fragile, the brewer’s ongoing product mix optimisation strategy should support steady revenue expansion throughout the year.
Margins Expected to Improve Significantly
Despite slower revenue growth, profitability is expected to strengthen considerably.
Cordros forecasts the company’s EBITDA margin to rise by 355 basis points to 22.8 per cent, compared with 19.3 per cent in 2025.
The expected improvement is attributed to slower growth in production costs resulting from continued localisation of raw material sourcing, improved operational efficiency and economies of scale.
Although selling and distribution expenses are projected to rise by 17.2 per cent, analysts believe the savings from lower production costs will more than offset higher operating expenses.
Debt Reduction to Fuel Earnings Recovery
One of the strongest drivers of the improved outlook is the company’s significantly lower finance costs.
Following the complete repayment of its foreign currency-denominated debt, Cordros expects net finance costs to decline by 89.6 per cent to N4.61 billion in 2026 from N44.14 billion recorded in 2025.
Interest expenses alone are projected to fall by 80.8 per cent, while finance income is expected to increase by 143.5 per cent as higher cash balances earn stronger returns in Nigeria’s elevated interest rate environment.
As a result, the research house forecasts:
Profit Before Tax (PBT) to grow 81.1 per cent year-on-year.
Earnings Per Share (EPS) to surge 102.2 per cent to N6.47, compared with N3.20 in 2025.
Average annual EPS growth of 29.6 per cent between 2026 and 2030.
Balance Sheet Set for Major Transformation
Cordros also expects Nigerian Breweries’ financial position to improve substantially during 2026.
The company is projected to move into a net cash position, marking a significant turnaround from previous years when leverage remained elevated.
Key financial metrics are forecast to improve significantly:
Net debt-to-equity expected at -0.2x.
Net debt-to-EBITDA projected at -0.4x.
Interest coverage ratio forecast to rise sharply to 33.2x, from 4.4x in 2025.
Return on Average Equity (ROAE) expected to improve to 31.1 per cent.
Return on Invested Capital (ROIC) projected at 41.4 per cent, highlighting stronger capital efficiency.
According to Cordros, these improvements demonstrate the long-term benefits of the company’s deleveraging strategy and enhanced operational performance.
Valuation Suggests Shares Remain Undervalued
Cordros believes the brewer’s current valuation does not fully reflect its improving fundamentals.
The research firm valued Nigerian Breweries at N94.84 per share, using a combination of Discounted Cash Flow (DCF) analysis and sector-relative valuation models.
The valuation assumes:
Weighted Average Cost of Capital (WACC): 24.6%
Cost of Equity: 25.7%
Terminal Growth Rate: 4.0%
The analysts also noted that Nigerian Breweries currently trades at:
11.2x Price-to-Earnings (P/E)
5.5x Enterprise Value-to-EBITDA (EV/EBITDA)
These multiples remain significantly below the Middle East and Africa peer averages of 20.0x P/E and 11.2x EV/EBITDA, suggesting the stock remains attractively valued.
Potential Upside Risks
Cordros noted that the stock could deliver even stronger returns if the company records:
Stronger free cash flow generation.
Lower capital expenditure requirements.
Continued improvement in working capital management.
Faster-than-expected recovery in consumer demand.
Market Outlook
The report concludes that Nigerian Breweries has entered a stronger financial position after successfully addressing its debt burden and improving operational efficiency.
With a healthier balance sheet, expanding profit margins, declining finance costs and an attractive valuation relative to regional peers, Cordros believes the brewer is well-positioned to deliver sustained earnings growth and enhanced shareholder value over the medium term, supporting its upgraded “Buy” recommendation.
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