Research firm says offer is “fully valued” as refinery’s strong earnings growth meets expansion and funding risks.
GTI Research has estimated the probability-weighted fair value of Dangote Petroleum Refinery and Petrochemicals at N493 per share, placing its assessment below the N525 price at which shares are being offered to investors in the company’s landmark public offering.
The valuation, contained in a 22-page report published on Wednesday, September 16, 2026, was prepared by GTI Research analysts led by Abiodun Ogunniyi.
The assessment comes as the N2.15tn initial public offering remains open for subscription until October 13, with investors weighing the refinery’s sharp financial turnaround against the valuation attached to its future growth prospects.
At N525, GTI considers the offer price to be above both its central estimate and base-case valuation. The research firm described the shares at the offer price as “FULLY VALUED”, while also pointing to what it termed “that unearned premium” embedded in the current pricing.
GTI’s valuation range reflects the uncertainty surrounding the refinery’s future performance, particularly its ability to sustain margins, secure sufficient crude supplies and execute its planned capacity expansion.
Its estimates are:
- Conservative case: N328 per share
- Base case: N503 per share
- Bull case: N640 per share
- Probability-weighted fair value: N493 per share
At the N525 offer price, GTI’s probability-weighted valuation represents a premium of approximately 6.1 per cent to its N493 estimate and 4.4 per cent to the N503 base case. However, the offer remains about 21.9 per cent below the research firm's bull-case valuation of N640.
Refinery trades above global peers
GTI also compared Dangote Refinery's valuation with five comparable companies, examining the multiples investors typically pay for refining businesses.
According to the report, the peer group trades at an average of approximately 4.79 times earnings before interest, tax, depreciation and amortisation (EBITDA), and 8.54 times earnings under the price-to-earnings (P/E) measure.
At N525 per share, Dangote Refinery's valuation translates to approximately 8.9 times EBITDA and 12.6 times earnings.
That means investors subscribing at the offer price are paying substantially more for each unit of current profitability than investors typically pay for the selected peer companies.
However, GTI cautioned against relying solely on the peer comparison because the refinery is planning a major expansion that could significantly alter its earnings capacity.
Dangote Refinery currently has a capacity of 700,000 barrels per day and plans to double that figure to 1.4 million barrels per day by 2029.
A conventional peer valuation largely reflects what comparable companies are earning today and may not adequately capture the potential earnings from Dangote Refinery's planned expansion.
For that reason, GTI did not make peer valuation the dominant component of its overall assessment.
Instead, the firm used a blended valuation methodology, with about 70 per cent of its final valuation derived from approaches designed to capture the refinery's future growth prospects.
The peer-comparison approach, which produces the most demanding assessment of the IPO price, accounts for only about a quarter of GTI's final valuation.
Dramatic turnaround
GTI's assessment comes after a significant improvement in Dangote Refinery's financial performance.
The refinery's net loss narrowed from $1.51bn in 2024 to $475.8m in 2025 before the company reported a net profit of $1.82bn in the first half of 2026 alone.
GTI described the transformation as a “fundamental step-change” in the refinery's financial performance.
Revenue in the first half of 2026 reached $13.91bn, already exceeding the company's full-year 2025 revenue of $12.33bn by approximately $1.58bn.
The improvement was attributed largely to the refinery reaching full-capacity operations from March 2026, alongside stronger refining margins, commonly measured through crack spreads.
Gross margin also improved substantially, moving from negative 9.46 per cent in 2024 to 1.86 per cent in 2025 before rising to 18.56 per cent in the first half of 2026.
GTI said the performance demonstrated “the leverage inherent in high-complexity refining once capacity utilization reaches steady-state.”
The refinery also generated $1.51bn in operating cash flow during the first six months of 2026 and ended the period with $4.27bn in cash.
Crude supply remains a major concern
Despite the improvement in earnings, GTI identified several risks that could affect the refinery's ability to maintain its current performance.
Crude supply is one of the major concerns.
According to the report, Dangote Refinery sources between 60 and 70 per cent of its crude domestically through the naira-for-crude arrangement with the Nigerian National Petroleum Company Limited.
However, only about 46 per cent of allocated domestic crude volumes were delivered during the first quarter of 2026, forcing the refinery to rely more heavily on international spot purchases.
GTI said this creates a potential cost disadvantage and introduces uncertainty into the refinery's supply chain.
The report also highlighted a currency mismatch within the business.
Approximately 56 per cent of the refinery's operating cash flows are collected in naira, while about 70 per cent of its crude purchases must be settled in foreign currencies.
GTI described this as a “forex structural mismatch”, warning that movements in the naira could affect the company's costs and profitability.
$14.3bn expansion carries execution risk
The refinery's planned Phase 2 expansion is another major factor in the valuation debate.
The project is expected to cost approximately $14.3bn and would increase the refinery's capacity from 700,000 barrels per day to 1.4 million barrels per day by 2029.
The expansion could become a major source of additional revenue and earnings if successfully completed.
However, GTI also identified construction, financing, procurement and contractor-related uncertainties as significant execution risks.
The research firm therefore sees the expansion as both an important potential value driver and a source of uncertainty for investors.
Limited public float
GTI also raised concerns about the relatively small proportion of the company being made available to public investors.
Only 3.30 per cent of the post-offer company is being offered to public investors, while Aliko Dangote's beneficial ownership is expected to remain at approximately 84.4 per cent after the transaction.
The limited free float could contribute to price volatility after listing because relatively few shares will be available for trading in the public market.
The IPO comprises 4.1 billion ordinary shares offered at N525 each, with a minimum subscription of 10 shares, equivalent to N5,250.
At the offer price, the transaction implies a post-offer market capitalisation of approximately N65.22tn, equivalent to about $47.83bn.
The offer opened on September 14 and is scheduled to close on October 13, 2026.
Analysts divided over valuation
GTI's assessment contrasts with valuations published by other Nigerian investment firms.
CardinalStone Research and Chapel Hill Denham have independently placed considerably higher values on the refinery, with their assessments ranging between N77.7tn and N82.62tn in market capitalisation terms.
Those valuations are above the approximately N65.22tn market capitalisation implied by the N525 offer price, indicating that some analysts consider the offer price to leave room for further valuation upside.
Other market observers have also expressed differing views on the appropriate valuation for the refinery.
On Nairametrics' Drinks and Mics podcast, analysts including Samson Esemuede of Zrosk, Tunji Andrews of Awabah and Arnold Dublin-Green of Renaissance Capital Africa discussed differing perspectives on the IPO's valuation while highlighting its broader implications for Nigeria's capital market.
The transaction is expected to deepen participation in the Nigerian equities market and potentially bring a new generation of investors into the market.
GTI, however, views the investment primarily through a longer-term lens.
The firm describes the shares as “a 3-5 year holding proposition, not a short-term trade.”
That assessment places the focus beyond initial subscription levels or the early performance of the stock after listing.
For GTI, the longer-term investment case will depend largely on whether Dangote Refinery can sustain the strong refining margins recorded in the first half of 2026, secure reliable crude supplies, manage its foreign-exchange exposure and successfully execute the $14.3bn expansion that would double its refining capacity.
The divergent analyst valuations underscore the central question facing investors: whether the refinery's expected future growth is sufficient to justify paying a premium to its current earnings-based valuation.