August 21, 2026/Cordros Report
In this note, we update our view on International Breweries Plc (INTBREW), following the release of its H1-26 results. During the period, revenue grew modestly (+0.3% y/y), EBITDA margin expanded by 586bps y/y to 31.5%, and EPS declined by 7.2% y/y to NGN0.23. Following our review, we estimate revenue growth of 6.0% y/y in 2026E, EBITDA margin expansion of 908bps y/y to 31.6%, and EPS growth of 47.9% y/y to NGN0.45/s. Our forecasts reflect a gradual recovery in revenue, lower input costs, and higher finance income on a larger cash balance. Nonetheless, we believe the current share price already discounts the margin and earnings growth expectation, with our target price of NGN7.14/s implying a 29.3% downside from the current price of NGN10.10/s. We therefore maintain our “SELL” rating on the stock. Additionally, we do not forecast a 2026E dividend, as we do not expect the company to return to a positive retained earnings balance until 2027E. On our 2026E estimates, INTBREW trades at a P/E of 22.6x and EV/EBITDA of 7.0x, versus MEA peer averages of 16.5x and a median of 7.7x, respectively.
Lower input costs to drive margin and earnings expansion: We forecast revenue growth of 6.0% y/y in 2026E (2025FY: +26.6% y/y), reflecting a gradual volume recovery amid more contained price increases. On cost, we expect cost of sales to decline by 5.5% y/y, as a steadier naira and increased local sourcing of raw materials and packaging support the input cost base. Meanwhile, OPEX is projected to increase by 11.0% y/y (2025FY: +14.5% y/y and +15.0% y/y, respectively), reflecting higher marketing expenses (+9.0% y/y). Consequently, EBITDA margin is projected to expand by 908bps y/y to 31.6% (2025FY: 22.6%), driven by topline growth and a lower cost base, which more than outweighs OPEX pressure. Furthermore, we forecast net finance income of NGN5.05 billion (2025FY: NGN6.07 billion), as finance income of NGN20.41 billion (+11.9% y/y) on a larger cash balance more than offsets finance costs of NGN15.36 billion (+26.1% y/y). Accordingly, we forecast PBT growth of 53.9% y/y and EPS growth of 47.9% y/y to NGN0.45.
Returns on capital set to recover: INTBREW’s returns profile is expected to strengthen further over our forecast horizon. Return on average equity (RoAE) improved from -40.3% in 2024FY (when retained losses stood at NGN241.95 billion) to 10.7% in 2025FY. Return on invested capital (ROIC) followed a similar path, recovering from -27.2% in 2024FY to 13.8% in 2025FY. In 2026E, we forecast RoAE and ROIC to increase further to 14.0% and 21.6%, respectively, driven by margin expansion and limited growth in invested capital. In 2027E, we forecast RoAE and ROIC to increase to 19.3% and 29.7%, respectively, with ROIC moving above the company’s 25.6% WACC. Thereafter, we expect ROIC to remain elevated, averaging 31.1% over 2026E-2030E forecast horizon.
Valuation: Our target price is NGN7.14/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 (NGN5.54/s) and FCFE (NGN5.11/s) estimates, assuming a 25.6% WACC, 26.1% CoE and 4.0% terminal growth rate. Similarly, our multiple based FV was derived from an equal blend of EV/EBITDA (NGN10.55/s) and P/E (NGN7.37/s) estimates, utilising Bloomberg’s Middle East and African peer median EV/EBITDA and average P/E multiples of 7.7x and 16.5x, respectively.