SBG Securities Sees 47% EPS Growth Driving NGX in 2026 With GTCO as Top Pick

SBG Securities has released its 2026 equity market outlook, projecting a period of consolidation following a blockbuster 2025.

Analysts led by Muyiwa Oni estimate Earnings Per Share (EPS) growth of 46.6% for the fiscal year, a moderation from the triple-digit growth expected in 2025 but a clear indicator that the Nigerian Exchange (NGX) remains on a firm upward trajectory.

The report credits the Central Bank of Nigeria’s (CBN) aggressive reforms for anchoring the market’s resilience. With inflation cooling and currency volatility subsiding, the investment house argues that Nigerian equities are entering a “valuation sweet spot,” trading significantly below historical averages.

The Macro Catalyst: From Reform to Stability

SBG highlights that the transition from volatile “reform shocks” to steady-state stability is the primary driver for the 2026 outlook:

• Disinflation Trend: Tight monetary policy and stable energy prices are expected to continue dragging inflation lower, creating room for potential interest rate cuts later in the year.

• Corporate Recovery: Reduced FX volatility has significantly improved the planning capabilities of manufacturing firms, leading to projected volume growth and top-line expansion.

• Valuation Advantage: The NGX forward Price-to-Earnings (PE) ratio is projected to drop to 6.93x in FY26, down from 10.13x. This remains well below the 10-year average of 11.9x, suggesting substantial room for a market re-rating.

Five Key Themes Defining 2026

Investors should watch for five major shifts expected to shape capital flows this year:

• GDP Consolidation: Economic growth is expected to accelerate as structural reforms yield fruit.

• Monetary Pivot: Declining inflation is likely to motivate the CBN toward a more accommodative stance.

• FX Normalization: A “constructive” outlook for the Naira as liquidity improves and the current account stays in surplus.

• Foreign Return: Net foreign inflows turned positive in 2025 ($144m); SBG expects this recovery to continue, though still shy of the 50% historical participation levels.

• Pension Push: Pension Fund Administrators (PFAs) are returning to equities, with allocations expected to hit historical highs.

Sector Strategy and Top Picks

SBG maintains an Overweight stance on sectors positioned to benefit from high interest rates and infrastructure spend:

• Banks (Overweight): Favored for higher interest income and reduced loan loss expenses. Top picks are GTCO (Target Price: ₦140.82) and Zenith Bank (Target Price: ₦118.91).

• Telcos (Overweight): Driven by the triple engine of data growth, subscription increases, and fintech expansion.

• Cement (Overweight): Set to ride the wave of Nigeria’s renewed infrastructure push.

• Consumer Goods (Neutral): Analysts remain cautious as they wait for the “consumer recovery” to fully translate into bottom-line margins.

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