Dangote Cement is a better business than a year ago. Its share price assumes Nigerian rates will fall

Dangote Cement, worth ₦25.1 trillion, is one of the largest companies on the Nigerian Exchange and a stock most local pension funds and asset managers have to have a view on. So it’s the obvious first company to write a proper research note on: the kind an analyst at a fund would hand their portfolio manager, with a rating, a price target and a model behind it.

I built everything from the company’s own filings on the NGX: five years of annual accounts, the 2025 and 2026 interim results and the earnings releases. A script pulls each figure out of the PDFs, tags it with the file and page it came from, and checks it against the next year’s filing, which reports the same year again as a comparison. That cross-check found three genuine restatements in FY2024 and nothing else. The valuation is a formula-driven Excel model, and a separate script recomputes it from the raw data without opening the workbook, as a check that the spreadsheet does what I think it does.

The short version: the business is in great shape, but at ₦1,490 the share price already assumes Nigerian interest rates will fall a long way. I rate it Underweight, with a 12-month target of ₦1,007.

The business has re-rated

Dangote Cement is Nigeria’s largest cement producer, with 55 million tonnes of capacity across Nigeria and ten other African markets. Nigeria brings in about two-thirds of revenue and 91% of segment operating profit (first nine months of 2026).

2025 was a pricing year. Nigerian volumes were flat at 17.7 million tonnes, but revenue per tonne in Nigeria rose 34.8%, from ₦124,000 to ₦167,200. Group EBITDA rose 43.4% to ₦1,981 billion, and the margin widened from 38.6% to 46.0%. Finance costs halved, from ₦700 billion to ₦352 billion, and profit for the year doubled to ₦1,015 billion.

2026 is a volume year too. In the first nine months, volumes rose 6.4% in Nigeria and 14.0% across the rest of Africa, helped by the new plant in Côte d’Ivoire. Group volumes were up 9.4%, revenue 19.6% and EBITDA 23.7%, with a 46.8% margin.

Revenue grew 32.8% a year from 2021 to 2025, mostly from price, as the naira fell and inflation ran high. Cash followed. Free cash flow reached ₦1,213 billion in 2025, three times the 2024 figure, and paid down most of the debt taken on in 2024. By 30 September 2026 the company had moved from ₦683 billion of net debt at end-2025 to ₦51 billion of net cash.

But the share price has run further

The stock is up 145% this year and trades at its 52-week high. On trailing earnings it is priced in line with the other listed cement makers, so it isn’t expensive against its peers:

The problem is the comparison a Nigerian fund manager actually faces. Dangote’s free cash flow is 4.8% of its market value, and its dividend yield is 3.0%. Naira government bonds pay about 17%. Owning the shares instead of the bonds only makes sense if you expect interest rates to fall, a lot.

What the shares are worth

A DCF values the shares at ₦871. My forecast annualises the first nine months of 2026 (revenue ₦5,134 billion, EBITDA ₦2,450 billion for the year), then lets volumes grow 4–8% a year and naira prices 9–12%, roughly in line with inflation, out to 2031. The EBITDA margin eases from 46% to 44% as pricing normalises, and capital spending falls from 10% to 8% of revenue. Free cash flow to the firm rises from ₦1,341 billion in 2027 to ₦2,431 billion in 2031.

The terminal value is 62% of the ₦14.8 trillion enterprise value, which is normal for a DCF and is why I care most about the two numbers that drive it. Here is fair value per share across a range of both:

Not one cell reaches ₦1,490. Rolling ₦871 forward a year at the cost of equity, less the expected dividend, gives the 12-month target of ₦1,007.

What the price implies

The more useful question is what you’d have to believe to pay ₦1,490. Running the model backwards, holding growth at 11%, the price implies a WACC of 17.1%, 442 basis points below mine. Both the cost of equity and the cost of debt are built on the bond yield, so that works out to a risk-free rate of about 12.6%, against 17.2% at the latest auction. In other words, the price assumes roughly 460 basis points of rate cuts that haven’t happened yet. The alternative, holding the discount rate and asking what growth the price needs, gives 16.4% a year in naira forever, above any realistic path for inflation.

What could make me wrong

• Rates fall faster than I expect. This is the main risk to the call. Each 100 basis points off the WACC adds about ₦89 to fair value. If naira bond yields fall to around 12.6%, today’s price is justified.
• A bigger dividend. My FY2026 dividend estimate of ₦59.9 (a 4.0% yield) keeps the 2025 payout ratio. A special dividend would narrow the gap to bond income.
• The naira, in the other direction. In 2024 the group booked a ₦249 billion foreign exchange loss, and finance costs reached 19.6% of revenue. In 2025 that became a ₦28 billion gain, and finance costs fell to 8.2% of revenue. Some borrowing is in US dollars, so a weaker naira pushes costs back up.
• Dependence on Nigerian prices. Nigeria was 67% of 2025 revenue, and its volumes were flat, so the growth came from price. Political pressure on cement prices would hit the core of the business.
• The rest of Africa. Volumes outside Nigeria rose 14.0% in the first nine months of 2026, but their share of revenue fell from 40% in 2024 to 31%, because weak local currencies shrink those sales once converted into naira.

Governance

Dangote Industries Limited (DIL) owns 86.65% of the shares, and Aliko Dangote, DIL’s ultimate owner, a further 0.17%. That leaves a free float of about 13%, which limits trading and how much of the stock a fund can build up.

The number that stood out in the accounts was a ₦1,045.6 billion loan from the group to DIL at the end of 2024, equal to 48% of the group’s net assets. It was gone by the end of 2025. In 2025 the group earned ₦68 billion of interest from DIL and paid DIL ₦47.3 billion of interest, plus a ₦14.0 billion management fee. It is all disclosed and audited by KPMG, but if lending to the parent on that scale comes back, I’d apply a governance discount to the valuation.

Sources

• Dangote Cement annual accounts FY2021–FY2025, interim accounts for the first nine months of 2025 and 2026, and earnings releases, from the NGX document library
• BUA Cement and HBM Nigeria filings from the same library
• Debt Management Office FGN bond auction results, 19 October 2026
• Share prices: NGX close on 4 November 2026

The equity risk premium, beta, terminal growth and forecast drivers are my own judgement, not market data. This is an independent analytical exercise, not investment advice. Prices and data are as of 4 November 2026.