At the IPO price of ₦525, Dangote Petroleum Refinery is valued around $47 billion to $50 billion. The IPO offer is 4.1 billion new shares, roughly only 3.3% of the entire company, which means the amount of stock immediately available to the public for trading immediately will be relatively small.
That is why I would not be surprised if Dangote shares rise sharply after listing instead of falling immediately.
The IPO has generated massive attention. Investment platforms have struggled with the demand, social media is full of posts and marketing videos, and almost every major investment platform is talking about the refinery.
With limited supply and this much demand, hype alone can push the price significantly above ₦525.
But that does not change my valuation approach or even make me rush to buy immediately, I'll still wait. See my full review here
My first-year prediction
I expect the first year to be extremely volatile.
The stock could rally briefly after listing before eventually correcting as excitement reduces and more shares become available.
Private-placement investors are subject to a 365-day lock-up, while NGX rules require promoters and directors to retain at least 50% of their pre-IPO holdings for 12 months. After that period, additional selling pressure becomes possible, although nobody is required to sell.
My preferred accumulation range remains around ₦200 to ₦300, with ₦300-₦350 becoming increasingly interesting depending on earnings and expansion progress.
Please don't forget, we are building the infrastructure, we're not at 1.4M barrels daily yet.
My five-year prediction: around $100 billion
Dangote is already operating around 700,000 barrels per day, and the Nigerian refinery is being expanded toward 1.4 million barrels per day.
If that expansion is completed by 2029-2030 timeline and earnings continue growing, I can see the company approaching a $100 billion valuation within roughly five years.
At today's approximately 124.23 billion shares and ₦1,350/$, $100 billion would correspond to roughly ₦1,087 per share.
So my original ₦1,000 five-year target I posted on Instagram remains reasonable as a scenario, assuming execution.
My ten-year case: potentially $200 billion
Earlier my bull case was about $140B valuation and NGN1,500 per stock, but
Have you heard of the refinery in Kenya?
Have you heard of the refinery in Kenya?
Dangote Group has now commissioned engineering work for a separate 700,000-bpd refinery and petrochemical complex in Kenya.
That potentially gives Dangote Group exposure to more than 2 million barrels per day of refining capacity.
Note; I am not completely counting Kenya directly inside the listed Nigerian company because its final ownership structure has not been disclosed.
But, Imagine African distribution growing effortlessly, and the company becomes the dominant refinery, I can see a path toward $200 billion over ten years which will make Dangote Refinery the most valuable comparing it with even refineries doing over 3M barrels daily today, like valero refinery at $120B valuation.
At today's share count and exchange rate, that would imply roughly ₦2,170 per share.
That is my long-term bull case. This also shows you I'm a bit emotional in my bull case analysis, I love this Refinery.
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