November 11, 2026/Cordros Report
Following the release of its 9M-26 results, we update our estimates and outlook for Nigerian Breweries Plc (NB). In 9M-26, revenue and EPS increased by 5.4% and 33.4% y/y, respectively. However, Q3-26 revenue fell by 3.0% y/y on softer mainstream and value brand volumes amid seasonal weakness, while EPS improved to NGN0.68 (Q3-25: loss per share of NGN0.09), supported by lower raw material costs and a sharp decline in finance costs.
Following our review, we now model 2026E revenue growth of 7.9% y/y (Prev.: +12.3% y/y), EBITDA margin expansion of 425bps y/y to 23.5% (Prev.: +469bps y/y to 24.0%), and EPS of NGN5.48 (Prev.: NGN6.06). Our revisions reflect expectations of a slower volume recovery in the mainstream and value brands and higher OPEX growth of 13.3% y/y (Prev.: +11.2% y/y), which more than offsets a 0.8% y/y decline in cost of sales (Prev.: +4.2% y/y).
Accordingly, we lower our year-end TP by 4.9% to NGN81.19/share (Prev.: NGN85.41/share), implying a 16.0% upside to the current price of NGN70.00/share, and downgrade our rating on the stock to “HOLD” (Prev.: “BUY”). We also forecast 2026E DPS of NGN2.82 (Prev.: NGN3.12), implying a 4.0% dividend yield on the current price. On our revised estimates, NB trades at 12.8x 2026E P/E and 5.4x EV/EBITDA, vs. MEA peer averages of 18.7x and 8.1x, respectively.
Revenue and EPS forecasts lowered on slower volume recovery: We lower our 2026E revenue growth forecast to 7.9% y/y (Prev.: +12.3% y/y), reflecting a slower volume recovery in the mainstream and value brands following the softer Q3-26 outturn. We expect lower input costs to support gross margin, with COGS now forecast to ease by 0.8% y/y (Prev.: +4.2% y/y), underpinned by lower raw materials and consumables costs (-1.1% y/y | Prev.: +4.0% y/y) and other production costs (-2.8% y/y | Prev.: +4.7% y/y). However, higher projected OPEX growth of 13.3% y/y (Prev.: +11.2% y/y) outweighs the cost benefit. The upward revision in OPEX is driven by a 17.5% y/y increase in selling and distribution expenses (80.0% of OPEX), reflecting the company’s continued investment in distribution and marketing to defend market share. Overall, we now forecast EBITDA margin to expand by 425bps y/y to 23.5% (Prev.: +469bps y/y to 24.0%), with EPS advancing by 71.3% y/y to NGN5.48 (Prev.: +89.4% y/y to NGN6.06).
Strong cash conversion supports higher FCF: We project operating cash flow of NGN299.93 billion in 2026E (OCF margin: 18.9%) supported by higher EBITDA. We also model capex of NGN109.47 billion, implying capex intensity of 6.9% (Prev.: 5.9%) and an average of 6.2% over 2026E–2030E. Consequently, we forecast free cash flow of NGN189.97 billion in 2026E (+85.7% y/y | Prev.: NGN217.65 billion), representing an FCF margin of 12.0% and an FCF yield of 8.8%. We believe this comfortably supports shareholder distributions, and as such we forecast 2026E DPS of NGN2.82, implying a payout ratio of 51.5% and a dividend yield of 4.0%.
Valuation: Our target price is NGN81.19/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 (NGN63.35/s) and FCFE (NGN56.19/s) estimates, assuming a 23.6% WACC, 23.8% CoE, and 4.0% terminal growth rate. Similarly, our multiple-based FV was derived from a blend of EV/EBITDA (NGN102.85/s) and P/E (NGN102.37/s) estimates, utilising Bloomberg Middle East & African (MEA) peer averages for both factors (8.1x and 18.7x, respectively) as multipliers.