How Zenith, GTCO joined exclusive club of trillionaire market cap companies

Two Nigerian tier-1 lenders, Zenith Bank Plc and Guaranty Trust Holding Company (GTCO), have joined the exclusive club of companies with a market capitalization of over N1 trillion.

Zenith Bank’s market capitalisation crossed the N1 trillion mark after its share price closed at N34.25 per share on Friday. The bank’s market capitalisation is now valued at N1.07 trillion.

GTCO’s market capitalisation also crossed the N1 trillion mark after its share price closed at when its stock price closed at N34.40 per share from N32.70 per share. The bank’s market capitalization is now valued at N1.01 trillion.

Other stocks in the one trillion market cap category include Airtel Africa, MTN Nigeria, Dangote Cement, BUA Foods, BUA Cement, and Zenith Bank.

According to BusinessDay’s findings, this positive comes on the heels of banking stocks heading for a six-year high as investors cheer the Central Bank of Nigeria’s foreign exchange liberalisation. Investors have also raised bets on Oil and Gas stocks since the removal of petrol subsidies.

“Zenith Bank and GTCo crossed the N1 trillion market valuation as a result of the recent rally in the market influenced by the FX policy reforms,” said Tesleemah Lateef, a banking analyst at Cordros Securities Limited.

Ayodeji Ajilore, an investment analyst at ARM Investment Managers said the aggregation of policies of the new administration have started to encourage optimism that the new government is taking serious effort at market reforms, a move that is improving the outlook for the Nigerian capital market.

“One of such actions is the new FX regime, and how it eliminates the protracted concern of FX illiquidity,” he said.

Ajilore further said that these reforms, the decent valuation of the Nigerian equities market, how the tier 1 banks were about to avoid significant hit from the Ghana default, and the consistent dividend payment by banks such as Zenith and GTCo makes a case for the traction that they are currently getting amid the bull-run in the market.

Experts said the crossing of the N1 trillion market capitalization mark by Zenith and GTCO is a significant milestone for the Nigerian banking sector.

“It is a testament to the strength and resilience of these two banks, which have consistently delivered strong financial performance over the years,” Luqman Agboola, head of research at Sofidam Capital said.

Zenith Bank Plc announced a 41 percent growth in its gross earnings to the tune of N270 billion in Q1 2023 from N191.5 billion in Q1 2022.

GTCO reported a profit before tax of N74.1 billion for the first quarter of this year, up 36.5 percent from N54.3 billion in the same period of 2022.

“It shows that investors are confident in the future prospects of these two banks. This could lead to increased trading activity in the shares of these banks, which could boost the overall performance of the stock market,” Agboola said.

Others said the entry of Zenith and GTCO into the N1 trillion market capitalization club is also a sign of the growing maturity of the Nigerian financial markets.

“It shows that the Nigerian stock market is now capable of supporting large-cap companies. This could attract more foreign investors to the Nigerian market, which could further boost the growth of the economy,” Agboola said.

BUA Foods Plc

The share price of BUA Foods Plc close at N138.15 per share last Friday. Similarly, the market capitalisation stood at N2.44 trillion.

In its reported unaudited financial statement for Q1 2023, revenue grew by 60.2 percent to N144.32 billion from N90.06 billion recorded in Q1 2022.

Profit After Tax for the period rose by 77.1percent to N40.47 billion from the N22.84 billion recorded in Q1 2022.