November 5, 2025/Cordros Report
In this note, we update our estimates and outlook for NASCON Allied Industries Plc (NASCON). Revenue growth in Q3-25 was driven by measured volume expansion; however, cost of sales increased at a faster pace (+15.3% q/q) relative to revenue (+7.9% q/q). Consequently, we revise our 2025E gross margin down by 306bps to 49.0% (Previous: 52.1%), though still up by 291bps y/y, reflecting effective pricing and volume growth partially offset by rising costs. EBITDA margin is now projected at 32.8% (Previous: 34.2%), representing a 12.07ppts y/y expansion, driven by solid operational resilience and an 854bps y/y contraction in OPEX margin. As a result, we have revised our target price upward by 20.6% to NGN135.38/s (previous: NGN112.24/s), reflecting enhanced topline projections and resilient margins despite cost headwinds. The upward adjustment captures NASCON’s sustained margin expansion, underpinned by effective pricing, measured volume growth, and improved operating efficiency. At the current market price of NGN99.00/s, the stock offers a potential upside of 36.8%, translating to a BUY rating. On our estimates, NASCON currently trades at a 2025E P/E and EV/EBITDA of 3.5x and 2.0x – compared to MEA peer average of 7.6x and 6.2x, respectively.
Volume-led revenue growth supports margin resilience: We revise our 2025E revenue projection upward by 616bps to 45.8% y/y (Previous: +39.6% y/y), reflecting stronger-than-expected volume traction underpinned by the deepening B2B framework within the core salt portfolio (+45.0% y/y | Previous: +42.1% y/y) and robust pricing gains in the seasoning segment (+59.3% y/y | 2024FY: +41.8% y/y). The revision highlights NASCON’s capacity to manage higher raw material costs while advancing its seasoning Tier 1 upgrade, reinforcing top-line growth and market positioning. Over the medium term (2026 -2029E), we forecast average revenue growth of 18.0%. We lower our 2025E EBITDA margin forecast to 32.8% (Previous: 34.1%), capturing the impact of higher growth expectations in cost of sales (37.9% y/y | Previous: 24.1% y/y), despite improved operational efficiency, with OPEX margin forecast to improve to 16.9% (Previous: 18.2%). Reflecting stronger topline expectations and sustained operating leverage amid elevated input costs, we upgrade our 2025E EPS forecast to NGN15.42 (Previous: NGN15.26).
Valuation still reflects compelling relative upside: In our view, NASCON’s valuation remains undemanding, with trading multiples screening cheap at 2025E P/E and EV/EBITDA of 3.5x and 2.0x, versus peer averages of 7.6x and 6.2x. We believe the discount reflects residual market skepticism rather than weak fundamentals, as NASCON continues to deliver (1) superior return metrics underpinned by effective pricing and measured volume growth, and (2) robust cash generation capacity, with 2025E FCF yield surging to 20.9% (2024FY: 2.3%). Its entrenched B2B framework within the core salt portfolio further positions the company to capture improving demand dynamics and sustain revenue momentum. These factors, in our view, warrant further valuation re-rating, reinforcing the stock’s embedded upside potential.
Valuation: Our target price is NGN135.38/s derived from an equal blend of a DCF and sector relative valuation approach (P/E & EV/EBITDA). Our DCF FV is derived from an equal blend of FCFF (NGN150.64/s) and FCFE (NGN135.48/s), assuming a 25.1% WACC (previously: 26.5%) and a 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN138.03/s) and P/E (NGN117.55/s) multiples, utilising Bloomberg’s Middle East and African peer median for both factors (6.2x and 7.6x) as multipliers.
