April 20, 2026/InvestmentOne Report

Revenue contracted 3.59% YoY to NGN302.37bn, the first top-line decline since FY:2020. The contraction masked a divergent segment mix as fuel revenue (86.35% of total) fell 4.15% to NGN261.09bn on PMS volume softness, lubricants (12.74% of total) declined marginally by 1.69% to NGN38.53bn, while the small ‘Others’ segment (0.91% of total) grew 36.30% off a low base. Gross margin compressed sharply to 5.12% (FY:2024: 12.74%), reflecting the deregulated PMS environment where product costs moved faster than retail pricing and the company’s procurement timing did not capture the favourable window. Cost of sales rose 4.83% YoY despite lower volumes, compressing gross profit by 61.24% to NGN15.48bn, the weakest gross profit print in four years and the single most important headline takeaway from the FY:2025 result. 

Looking forward, we believe that Eterna s NGN34.31bn inventory build-up as at year end 2025 would serve as a boost to profit margins in H1:2026 due to the higher PMS price environment. Our blended fair value lands at NGN19.27/share, implying 43.65% downside to the current price of NGN34.20. We anchor on a multi-method framework (FCFE 35%, P/E 30%, FCFF 10%, EP Enterprise 10%, NAV 10%, P/B 5%) using a 2026 WACC of 19.75% that declines to a continuing WACC of 15.07%. The transition through FY:2026 FY:2027 will be shaped by inventory monetisation against a backdrop of ongoing MPR-driven borrowing costs and naira stability uncertainty.

Our forecast assumes realised cost of debt of 13.00% moderating to 9.00% by FY:2030 as interest rates normalise. We see FY:2026 revenue at NGN338.69bn (+12.01% YoY) with EBIT of NGN11.85bn, recovering through the forecast horizon to a normalised EPS of NGN4.22 by FY:2028 FY:2030. As such, we place a SELL recommendation for Eterna.

Please click here to download full report.