Unilever Nigeria Hits 52-Week High, Approaches New Target Price
Unilever Nigeria Plc’s market value soared to a new 52-week high in a fresh rally that lifted its share price by 4.35% to N48 in the equities market, a moderate discount to the fresh target price set by equities analysts at WSTC Securities Limited.
The consumer goods company’s share price surged to N48 in the stock market as 3.219 million units valued at N153.953 million were transacted on the Nigerian Exchange trading platform on Thursday. Unilever Nigeria Plc’s market value is way ahead of its 52-week low of N15.05, suggesting a strong price appreciation in the last 12 months in the local bourse.
Equities analysts at WSTC Securities Limited upgraded Unilever Nigeria Plc.’s target price by 106% to N50.01 as earnings improved from NN24.26—maintaining a hold rating due to lack of significant upside potential. In the first quarter of 2025, Unilever Nigeria Plc put up a good show that bolstered its earnings and revenue performance amidst tight economic conditions.
The consumer goods company’s total revenue reached N46.98 billion, which was a 45% year-on-year growth compared to N32.32 billion in Q1 2024. Reflecting increased activities and inflationary position in Nigeria, its cost of sales grew by 31% year-on-year to N26.49 billion as against N20.23 billion in Q1-2024.
Unilever’s gross profit margin edged higher year on year as costs of sales growth tracked below revenue growth. The company reported a 620 basis point expansion in gross margin, which improved to 44% from 37% in Q1 2025, according to analysts’ notes.
WSTC Securities Limited said in its update that the margin improvement reflects the company’s cost efficiency, consistent with trends observed in 2024. In absolute terms, gross profit grew by 40% to N18.85 billion, from N13.50 billion in Q1 2024. To enhance the accuracy of operational performance analysis, certain line items previously included in the cost of sales were isolated and reclassified as non-operating activities.
The financial scorecard of the company also showed that operating expenses increased moderately by 11% to N10.80 billion from N9.69 billion in the comparable period. This surge was primarily due to a 22% rise in selling and distribution expenses and a 10% increase in marketing and administrative costs, analysts highlighted in the note.
The increase in operating expenses was outpaced by the significant growth in gross profit, driving operating profit up by 302%.
This drove operating margin up by 19%, from 8% in Q1 2024. Analysts said non-operating activities delivered a mixed performance, ultimately resulting in a contraction in non-operating profit to N994.78 million, down from N1.94 billion in Q1 2024.
Unilever Nigeria’s net finance income improved significantly to N2.09 billion, compared to a net finance cost of N1.12 billion in Q1 2024. Analysts said this bright spot was mainly due to higher interest income from call deposits and bank balances.
However, the net finance income was offset by a foreign exchange loss of N105.78 million, a swing from the gains of N2.82 billion in Q1 2024. The reversal stemmed mainly from the reclassification of foreign exchange losses on foreign-denominated balances, which were previously captured under cost of sales.
WSTC Securities Limited stated that the improvement in operating activities culminated in a 147% increase in profit before tax to N10.75 billion versus N4.36 billion in the comparable period in 2024.
However, a notably high effective tax rate of 48% moderated the bottom line impact, bringing profit after tax to N5.55 billion, a 65% year-on-year increase from N3.36 billion in Q1 2024.
“For the rest of 2025, we project continued revenue growth across all operating segments, supported by sustained pricing strategies and ongoing investment in brand awareness”, WSTC Securities Limited said in the review. Analysts said these marketing efforts are expected to drive volume gains by expanding market reach and deepening consumer engagement.
“We also anticipate an improved macroeconomic environment, with easing inflation likely to restore consumer purchasing power and further support top-line performance. Overall, we forecast a 37% year-on-year jump in total revenue to N204.54 billion for FY 2025. We expect gross margin expansion to persist, anchored on our assumption that revenue will continue to outpace the cost of sales”, the firm said.
Analysts noted that this expectation is supported by improved product mix sales, moderating inflation, and reduced currency volatility, all of which should ease pressure on the company’s foreign-denominated input costs. In addition, the operating expense margin is projected to decline as cost efficiency improves.
Altogether, analysts said, these dynamics could drive up to a 632-basis point expansion in operating margin to 19% from 12% in 2024, thereby strengthening the company’s profitability outlook. “Based on our optimism for the company’s performance for 2025, we revised our fair value to N50.01 from N24.26”, WSTC Securities Limited said in its report.
The firm said at the reference price of N46.05, its fair value offers a total return of 13.92%, inclusive of a 5% dividend yield. Hence, analysts maintain a hold recommendation.
With a hold recommendation, equities analysts are effectively guiding exiting investors not to change position. Buying Unilever Nigeria could be risky for new investors on the expectation that there will be neither significant potential for price appreciation nor a high risk of substantial price decline.
In financial year 2024, Unilever Nigeria Plc reported that its profit before tax edged up by 3% to N22.65 billion from N21.89 billion in 2023 amidst a challenging macroeconomic landscape. However, after accounting for estimated tax obligations, profit after tax declined by 8%, settling at N15.14 billion compared to N16.41 billion in the prior year.
The net income slide reflects the impact of a 37% growth in tax paid on the bottom line despite growth in pre-tax earnings. The effective tax rate for FY 2024 was 33.14%, up from 25.02% in FY 2023. #Unilever Nigeria Hits 52-Week High, Approaches New Target Price NGX Index Hits Fresh High as NB, Dangote Sugar, MTN Rally
