Analysts forecast higher returns from Transcorp Power shares

Since the listing by introduction of Transcorp Power Plc on the Nigerian Exchange, financial analysts and stockbrokers have been speaking on the stock with many forecasting high yield for discerning investors.

They also believe the listing presents opportunities for deeply enriching the nation’s capital market while also providing funding leverage for the nation’s power sector.

Shares of newly listed Transcorp Power which rose to N380 per share on Wednesday implies its capitalisation has reached N2.85trillion, an increase by N1.05trillion in eight trading days after listing.

Many of those who spoke on the listing said it would open the eyes of the players in the power sector to the low-cost funding opportunities provided by the capital market.

Speaking on the listing, Abdulmumin Ali, Managing Partner, QL Resources Limited a financial analyst based in Abuja said playing in the capital market will provide impressive rewards for investors and also help in enriching the Nigerian capital market.

Noting that Transcorp Power shares have already gained more than 47 percent since it was launched one week ago, Ali predicted a sustained good performance of the stock in the market and said investors who take early positions will reap immense benefits in the short to medium term.

“Anybody with investible funds at this time should buy Transcorp Power shares. Such investments will likely triple within the next one year,” Ali predicted.

On where he hinged his prediction, Ali pointed at the 84 percent spike in profits between 2022 and 2023 as well as the exponential increase in share capital over the same period as indicators of great opportunities for investors.

“Transcorp Power had their Revenue From Contract With Customers grow by 57 percent over the past year to culminate in a Profit Before Tax of N52.7billion as at the year ended December 31, 2023. This in effect was a Profit spike of 84 percent from N27.6billion as at December 2022. Again, you will note, when you review the Independent analysts’ reports that their topline has grown consistently over the past 5 years, with good efficiency ratios.”

Also speaking on the listing, Mike Eze, CEO, Crane Securities Limited said the listing of Transcorp Power on the Nigerian Exchange bodes well for both the newly listed company and Nigerian investors, adding that the Nigerian securities market remains the destination of choice for businesses in need of low-cost capital, while also providing the right opportunities for the diversification that improves governance.

Eze expressed confidence that the Nigerian securities market has the sophistication and stature to absorb any funding demands of the power sector companies such as Transcorp and urged other players to embrace the capital market.

““Ours is a market, though an emerging market, was rated the best-performing market in the world in 2023 by the International Finance Corporation (IFC). We received favourable ratings from other international agencies as well. The capital market can raise funds to any required capacity. It all depends on the needs of the issuer! This market, the Nigerian Exchange Plc has the capacity and the appetite to take the demands of the power sector and indeed other sectors should they all decide to come at the same time,” he said.

Also speaking, Vincent Ugwu, Managing Director/CEO of De-Lords Securities Limited, believes the capital market may eventually become the destination of most of the players in the power sector in Nigeria because of the advantages the market has in raising low-cost capital.

“There is no doubt that the interest that investors are showing in the stocks of Transcorp Power will attract other players. Opportunities abound in the power sector in Nigeria. There are opportunities in the gas value chain, there are opportunities in widening the areas of coverage and there are also opportunities in cross-border selling of power. Discerning players such as Transcorp Power will always come to the capital market and get the sort of growth they dream of,” Ugwu stated.