Analysts at Chapel Hill Denham maintained a “Buy” rating on Dangote Sugar Refinery Plc with a target price of N91.94, reflecting continued confidence in the consumer goods giant balance sheet de-risk.
The price target implies an upside of 31% from the stocks closing price of N70 per share on Thursday.
Dangote Sugar has launched a N485.88 billion rights issue, and proceeds from the capital raise will be used entirely towards debt repayment across three loan tranches scheduled for completion in the third quarter of 2026 (Q3)-26.
The three loan tranches include related party loans from Dangote Industries Limited (DIL) (N299.08 billion, 62.5 percent of net proceeds), USD-denominated letters of credit (N120.58 billion, 25.2 percent) and commercial paper (N59.12 billion, 12.4 percent).
“We highlight that the N300 billion) DIL facility was itself fully drawn between February and April 2026 and applied towards refinancing short-term obligations to domestic banks,” said analysts at Chapel Hill Denham.
“We view the rights issue as the material deleveraging event that will transform the debt composition of Dangsugar,” said analysts at Chapel Hill Denham.
Total debt (long and short) in the company’s books stood at N584.14 billion in the first six months of 2026, which is 19.46 percent lower than 2025’s N725.30 billion.
Interest coverage ratio stood at 2.21 as at June 2026, according to MoneyCentral calculations. The figure is a measure of a company’s ability to repay its debts, with a ratio of at least 2 generally considered the minimum acceptable amount for a company with solid revenues. Analysts typically prefer a coverage ratio of 3 or higher.
Dangote Sugar to return to positive retained earnings in year-end 2027
Despite posting a profit after tax (PAT) of N41.50 billion, Dangote Sugar still has accumulated losses of N148.24 billion. The firm has a positive shareholders’ fund of N170.48 billion.
“We expect the company to return to positive retained earnings in full-year (FY)-27E, supported by robust profit as deleveraging reduces finance cost,” said analysts at Chapel Hill Denham.
Dangote Sugar has gained 16.7 percent year to date (YTD) to N70, outperforming the NGX Consumer Goods Index (3.3 percent YTD) but underperforming the NGXASI (57.6 percent YTD).
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