August 19, 2026/Cordros Report
Following the release of its H1-26 results, we update our estimates and outlook for Nigerian Breweries Plc (NB). We now model 2026E revenue growth of 12.3% y/y (Prev.: +12.9% y/y), EBITDA margin expansion of 469bps y/y to 24.0% (Prev.: +355bps y/y to 22.8%) and EPS of NGN6.06 (Prev.: NGN6.47). The marginally lower revenue forecast reflects slower expected volume recovery, as pricing action continues to weigh on demand. However, we project stronger EBITDA margins due to lower cost of sales growth forecast of 4.2% y/y (Prev.: +5.4% y/y) and slower OPEX growth of 11.2% y/y (Prev.: +14.1% y/y). Additionally, we estimate a higher effective tax rate of 38.5% (Prev.: 30.0%) on the back of the full utilisation of the company’s deferred tax asset, which had previously provided a buffer to its tax expense. Reflecting these revisions, we lower our year-end TP by 9.9% to NGN85.41/share (Prev.: NGN94.84/share) implying a 24.0% upside to the current price of NGN68.90/share, hence we affirm our “BUY” rating on the stock. Additionally, we forecast 2026E DPS of NGN3.12 (Prev.: NGN3.98), implying a 4.5% dividend yield and bringing total expected return to 28.6%. On our revised estimates, NB trades at 11.4x 2026E P/E and 4.9x EV/EBITDA, vs. MEA peer averages of 16.5x and 8.2x, respectively.
Volume-led recovery and softer costs support earnings: We now model 2026E revenue growth of 12.3% y/y (Prev.: +12.9% y/y), supported by volume growth on the back of the company’s route-to-market expansion strategy and price increases. Over 2026E–2030E, we forecast a revenue CAGR of 11.3%. On costs, we now model COGS growth of 4.2% y/y (Prev.: +5.4% y/y), reflecting a downward revision in our raw materials and consumables costs forecasts. Similarly, we lower OPEX growth forecast to 11.2% y/y (Prev.: +14.1% y/y) despite a 17.8% y/y increase in selling and distribution expenses (Prev.: +17.2% y/y). Consequently, we raise our EBITDA margin forecast to 24.0% (Prev.: 22.8%). Below the operating line, we now expect net finance costs to decline by 86.0% y/y to NGN6.17 billion (Prev.: NGN4.61 billion), reflecting a 75.4% y/y reduction in finance costs following the full repayment of borrowings, alongside a 198.6% y/y increase in finance income on a larger average cash balance. Accordingly, we now forecast 2026E EPS of NGN6.06 (Prev.: NGN6.47) and a 2026E–2030E CAGR of 20.6% (Prev.: 29.6%).
Strong cash conversion supports higher FCF: We project operating cash flow of NGN315.60 billion in 2026E (OCF margin: 19.2%), reflecting stronger operating profitability and improved working capital efficiency. We also model capex of NGN97.43 billion, implying capex intensity of 5.9% (Prev.: 7.5%) and an average of 5.2% over 2026E–2030E. Consequently, we forecast free cash flow of NGN217.65 billion in 2026E (+112.8% y/y), representing an FCF margin of 13.2% and an FCF yield of 10.2%. We believe this level of free cash flow generation comfortably supports the resumption of shareholder distributions. Accordingly, we now forecast 2026E DPS of NGN3.12 (Prev.: NGN3.98), implying a payout ratio of 51.5% and a dividend yield of 4.5%.
Valuation: Our target price is NGN85.41/s, derived from a 50/50 blend of DCF and sector relative valuation estimates. Our DCF FV is derived from an equal blend of FCFF (NGN69.60/s) and FCFE (NGN61.60/s) estimates, assuming a 23.8% WACC, 24.1% CoE and 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN110.59/s) and P/E (NGN99.83/s) estimates, utilising Bloomberg Middle East & African (MEA) peer averages for both factors (8.2x and 16.5x, respectively) as multipliers.