July 7, 2026/Cordros Report
In this report, we update our outlook and estimates for TOTAL for 2026E. We now forecast revenue growth of 4.1% y/y (Prev.: 12.6% y/y), following a weaker-than-expected Q1-26 performance that has led us to lower our volume growth assumptions to 0.5% y/y growth (Prev.: +13.7% y/y), amid continued competitive pressure. Despite this weaker top line outlook, we forecast EBITDA margin expansion of 90bps y/y to 3.4% (Prev.: -20bps y/y to 2.3%), with costs (+1.8% y/y) and operating expenses (+5.3% y/y) growing slower than revenue. As a result, we now forecast a significantly narrower loss per share of NGN1.18 (Previous estimate: loss per share of NGN18.58), driven by the improved operating profitability. Accordingly, we revise our target price upwards to NGN230.61/share and maintain our “SELL” recommendation as earnings performance is expected to remain subdued despite the margin accretion. Based on our 2026E estimates, TOTAL trades at an EV/EBITDA multiple of 9.9x, implying a premium to the MEA peer average of 6.5x
Earnings to remain constrained: We revise our 2026E revenue growth forecast downwards to 4.1% y/y (Prev.: +12.6% y/y), as we now expect volume growth to slow to 0.5% y/y (Prev.: +13.7% y/y), reflecting residual market share losses from the 2025 competitive pricing environment that have yet to fully reverse. This is partly offset by firmer pricing, with product prices remaining elevated relative to 2025, even as our crude price assumption is revised lower following the easing of Middle East supply tension. Specifically, we project a 2026E average PMS price of NGN1,100.37/litre (Prev.: NGN1,163.09/litre), based on an average Brent crude price of USD85.00/bbl (Prev.: USD96.00/bbl), a PMS landing cost of USD0.76/litre or NGN1,048.93 (Prev.: USD0.79/litre or NGN1,106.00), and an average exchange rate of NGN1,380.00/USD (Prev.: NGN1,400.00/USD). We expect EBITDA margin to expand by 90bps y/y to 3.4% (Prev.: 2.3%), with revenue growth outpacing COGS growth of 1.8% y/y (Prev.: +12.6% y/y), amid a 5.3% y/y increase in operating expenses (Prev.: +3.3% y/y). Overall, we expect a loss per share of NGN1.18 in 2026E (Prev.: NGN18.58).
Liquidity increasingly debt-funded: Working capital is expected to weaken by NGN10.15 billion in 2026E, as a sharp paydown of trade creditors and related-company balances outpaces the cost base, tying up cash within the operating cycle. Consequently, total debt, consisting entirely of overdraft borrowings, is projected to increase by NGN57.25 billion to NGN124.99 billion (2025FY: NGN84.67 billion). With equity contracting to NGN47.14 billion (2025FY: NGN47.54 billion), we expect net debt/equity to rise to 1.12x (2025FY: 0.85x) reflecting greater reliance on debt financing. A lower overdraft rate of 18.5% (2025FY: 22.0%) partly offsets the cost of the larger balance. Nevertheless, interest coverage remains weak at 0.90x (2025FY: 0.36x).
Valuation: Our year-end target price is NGN230.61/s, derived from a 60/40 blend of DCF and sector relative valuation estimates (EV/EBITDA). Our DCF FV is derived from an equal blend of FCFF (NGN211.50/s) and FCFE (NGN66.61/s) estimates, assuming a 22.3% WACC, 24.9% CoE and a 4.0% terminal growth rate. Similarly, our multiples based FV was derived from EV/EBITDA (NGN367.94/s) multiple, utilizing Bloomberg’s Middle East and African peer median of 6.5x as multiplier.