August 10, 2026/Cordros Report
This report provides an updated outlook and revised estimates for TOTAL following the release of its Q2-26 results. Notably, the company delivered its strongest quarterly performance since Q4-24, with revenue rising by 22.0% y/y (H1-26: +4.7% y/y), driven by a stronger pricing environment amid still-elevated crude oil prices. Additionally, a 42.6% y/y decline in net finance costs provided further support to profitability.
Accordingly, we raise our target price by 47.7% to NGN340.57/s (Prev.: NGN230.61/s) while maintaining our “SELL” recommendation. The revision reflects our expectation of sustained revenue growth (2026E: +15.3% y/y), supported by elevated petroleum product prices and lower finance costs (-21.9% y/y) as debt continues to decline. We estimate a 2026E DPS of NGN6.18, implying a 1.0% dividend yield at the current share price of NGN640.00/s. Based on our estimates, TOTAL trades at a 2026E EV/EBITDA of 8.0x, representing a discount to the MEA peer average of 8.8x. On a P/E basis, however, the stock trades at 50.7x, a substantial premium to the MEA peer average of 14.5x.
Revenue growth drives earnings recovery: We revise our 2026E revenue growth forecast upwards to 15.3% y/y (Prev.: +4.1% y/y), driven by higher pump prices as supply constraints push Brent crude higher and feed through into refined product prices. We now project a 2026E average PMS price of NGN1,225.01/litre (Prev.: NGN1,100.37/litre), based on an average Brent crude price of USD87.00/bbl (Prev.: USD85.00/bbl), a PMS landing cost of USD0.85/litre or NGN1,173.57 (Prev.: USD0.76/litre or NGN1,048.93), and an average exchange rate of NGN1,380.00/USD. Volume growth should also pick up pace to 2.8% y/y (Prev.: +0.5% y/y), though we expect this to remain moderate as residual market share losses from the 2025 competitive pricing environment have yet to fully reverse, and higher product prices continue to weigh on consumption. We expect revenue growth to outpace COGS growth of 13.5% y/y (Prev.: +1.8% y/y) and a 9.4% y/y rise in operating expenses (Prev.: +5.3% y/y), driving EBITDA margin expansion of 110bps y/y to 3.6% (Prev.: +90bps to 3.4%). Altogether, we now forecast EPS of NGN12.62 in 2026E (Prev.: loss per share of NGN1.18) and estimate a 2026E DPS of NGN6.18/s, implying a 49.0% payout ratio.
Operating leverage supports gradual margin recovery: We estimate 2026E incremental EBITDA and EBIT margins of 10.6% and 11.5%, well above the 2025A blended margins of 2.5% and 1.2%, respectively, implying that for every additional NGN1.00 in revenue, c. NGN0.11-0.12 converts to profit. This is supported by an improvement in the opex-to-sales ratio to 10.7% in 2026E (2025FY: 11.3%), as revenue growth outpaces the growth in operating expenses. Over our forecast horizon, we expect EBITDA margin to more than double to 5.3% by 2030E (2025FY: 2.5%). Although still below TOTAL’s 2021A-2025A average of 6.2%, this signals a recovery in earnings trajectory rather than a structural step-up in profitability.
Valuation: Our year-end target price is NGN340.57/s, derived from a 60/40 blend of DCF and sector relative valuation estimates (P/E & EV/EBITDA). Our DCF FV is derived from an equal blend of FCFF (NGN340.28/s) and FCFE (NGN193.92/s) estimates, assuming a 22.3% WACC, 24.8% CoE and a 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from an equal blend of EV/EBITDA (NGN718.92/s) and P/E (NGN182.66/s) multiples, utilizing Bloomberg’s Middle East and African peer median for both factors (8.8x and 14.5x) as multipliers.