Dangote Cement soared to a market capitalization of N10 trillion on Monday, securing its place as the first company to reach this milestone on the Nigerian Exchange (NGX). This surge was bolstered by billionaire businessman Femi Otedola’s substantial acquisition of Dangote Cement shares.
The company closed Monday’s trading session with an impressive N10.098 trillion market cap, marking a remarkable gain of N917 billion, attributed to a substantial 9.99% surge in its stock. This surge contrasts starkly with the N5.451 trillion market cap the firm closed with at the end of 2023.
Dangote Cement’s shares closed at N590.60 per unit at the end of Monday’s trading, reflecting a significant appreciation from its previous value.
This achievement comes as Dangote Cement surpasses Airtel Africa as the most capitalized stock on the local bourse this month. Investors in Dangote Cement have witnessed an impressive 85.25% appreciation in their investments in terms of capital gains.
Otedola, who referred to Aliko Dangote as his “bestie,” explained his rationale for acquiring stakes in Dangote Cement in a statement released on Monday. He highlighted the company’s potential to earn foreign exchange and its adherence to Environmental, Social, and Governance (ESG) principles as key factors influencing his investment decision.
“Dangote Cement’s unique position with two export terminals offers a substantial opportunity to earn foreign exchange, crucial for Nigeria’s economy. This, along with the company’s pan-African presence, makes it an ideal investment choice,” Otedola stated.
He further emphasized Dangote Cement’s strong corporate governance and impressive ESG compliance track record as factors contributing to its appeal as an investment. Otedola’s focus on long-term wealth preservation and his commitment to businesses prioritizing shareholders were also cited as motivations behind his investment decisions.
As of February 2023, Dangote Industries Limited, the parent company, held an 85.8% stake in Dangote Cement. Otedola had previously offered to acquire a stake in Transnational Corporation Plc in April 2023 but faced rejection.
Financial and economic analyst, Rotimi Fakayejo, explained that three factors govern share price movement in the market: corporate fundamentals, demand and supply forces, and market hearsay. Otedola’s acquisition of Dangote Cement shares has evidently contributed to the recent surge in market capitalization, sparking optimism about the stock’s future potential.
Commenting on the rise in Dangote Cement’s market cap, Garba Kurfi, Managing Director of APT Securities and Funds Ltd, indicated that the substantial ownership of shares by Dangote himself minimizes the impact of other shareholders. However, the market remains attentive to the potential influence of significant acquisitions on stock prices.
Fakayejo added, “The bottom line is Nigerian shares are underpriced. We believe that Dangote Cement should be among the stocks that will rank at least $1, which implies that it should be priced above N1,000. Some in the mid-term, we are going to see it get to that point.” The future trajectory of Dangote Cement’s stock performance holds high expectations as investors continue to monitor the unfolding developments.