August 4, 2025/Cordros Report
We have updated our estimates for Nigerian Breweries Plc (NB) following their strong H1-25 performance. The company sustained impressive topline growth, with Q2-25 revenue rising by 40.8% y/y (H1-25: +53.9% y/y), supported by pricing gains and a favourable brand mix. Despite a 7.6% q/q dip in revenue – reflecting seasonal volume weakness – NB has already achieved 46.5% of our revised 2025E revenue forecast of NGN1.59 trillion. With FX pressures largely behind and operating performance strengthening, we anticipate a sustained margin recovery through 2025E. Accordingly, we revise our 2025E gross margin forecast to 41.1% (prev: 35.1%) and EBITDA margin to 23.2% (prev: 17.5%). In line with this, we raise our target price to NGN82.45/s (prev: NGN50.52/s) but downgrade our rating to “HOLD” (prev: “BUY”), as the current market price already reflects most of the projected upside. We retain a positive medium-term outlook, underpinned by stronger operational execution, reduced financial leverage and a favourable macroeconomic backdrop. NB now trades at 2025E EV/EBITDA and P/E multiples of 6.8x and 14.2x, respectively.
Earnings momentum backed by stronger margins: We raise our revenue forecast for 2025E slightly to 46.5% y/y (previously: 46.3% y/y), reflecting favourable mix improvements, and modest volume support from the mainstream and premium segments led by Heineken (via the new 45cl bottle and 50cl can), Desperados, Legend, Tiger and Goldberg. Over the medium term (2025-2029E), we project an average annual revenue growth of 22.4%. We now estimate a gross margin of 41.1% in 2025E (prev: 36.4%), supported by stable input costs, improved local sourcing, disciplined cost control, and robust topline growth. Consequently, EBITDA margin is expected to expand to 23.2% (prev: 17.5%), underpinned by improved cost efficiency, supply chain optimisation, currency stability, and synergies from the Distell integration. Reflecting these gains, we have revised our 2025E EPS estimate upwards to NGN5.57 (prev: NGN3.53 | 2024FY: loss per share of NGN12.07).
EBITDA margin recovery signals operational resilience: NB’s EBITDA margin rose sharply in H1-25 to an estimated 25.2% (vs. 11.9% in 2024FY), reflecting strong topline growth, effective cost management, and FX-related gains. Notably, early benefits from the Distell integration and streamlining efforts are starting to support performance, with further upside anticipated as full synergies are realised. Looking ahead, we project a 2025E EBITDA margin of 23.2% (prev: 17.5%), supported by continued pricing optimisation, enhanced local sourcing, and better cost leverage as volume performance improves. This anticipated margin print marks a return to pre-COVID levels (2018FY: 20.9%; 2019FY: 21.0%) and reinforces our positive medium-term outlook on NB’s earnings trajectory.
Valuation: Our year-end target price is NGN82.45/s, derived from an equal blend of DCF and sector-relative valuation (P/E & EV/EBITDA) estimates. Our DCF FV (NGN64.59/s) is derived from an equal blend of FCFF (TP: NGN64.41/s) and FCFE (TP: NGN57.61/s) estimates, assuming a 20.0% WACC, 20.3% CoE and a 4.0% terminal growth rate. On P/E (TP: NGN98.76/s), we utilised the 2025E Middle East & African (MEA) peer average multiple of 18.6x. For EV/EBITDA (TP: NGN108.82/s), we utilised the 2025E MEA peer average (9.3x).
