Nascon Allied Industries Plc Delivers Strong Turnaround with 222% Profit Growth in H1 2025 — Strong Buy Case Emerging

Nascon Allied Industries Plc has posted a stellar financial performance for the first half of 2025, marking a robust turnaround story that underscores operational efficiency, margin expansion, and stronger investor value creation. With H1 2025 net profit surging by 222% YoY to ₦15.6 billion from ₦4.8 billion, Nascon’s recovery is not just a rebound but a compelling case for equity accumulation.

Key Strengths

• Explosive Earnings Growth: Net profit rose by 222% YoY, driven by strong top-line growth (up 55%) and improved cost controls. Operating profit for H1 surged to ₦21.3 billion, nearly 3x the ₦7.2 billion reported in H1 2024.
• Margin Expansion: Gross profit margin improved substantially to 47.8% in H1 2025 (vs. 43.7% in H1 2024), reflecting better pricing power and efficient production cost management.
• Solid Cash Position: Cash and equivalents rose to ₦36.6 billion (up 48% from FY 2024), providing flexibility for future expansion, debt repayment, or dividend enhancement.
• Low Financial Leverage: With total borrowings at ₦1.1 billion, Nascon maintains a lean capital structure, improving its resilience and earnings quality.
• Impressive EPS Growth: Earnings per share jumped to ₦11.54 in H1 2025 (vs. ₦3.59 in H1 2024), signaling substantial value creation for shareholders.

Weaknesses & Risks

• Surging Payables: Trade and other payables ballooned to ₦35.2 billion (vs. ₦12.7 billion in FY 2024), which may indicate working capital pressure or delayed supplier settlements.
• Declining Asset Base: Non-current assets declined by ₦714 million in H1 2025, suggesting underinvestment or depreciation-heavy fixed assets that may limit capacity growth unless reinvestment occurs.
• Distribution & Admin Cost Growth: Combined operating expenses (distribution + admin) rose 17.6% YoY to ₦15.65 billion in H1 2025. While revenue growth offsets this now, rising costs could eat into margins if inflation persists.
• Tax Expense Impact: A steep increase in tax expense to ₦7.7 billion in H1 (from ₦2.3 billion) reflects improved profitability, but it also pressures net margin.

Valuation Outlook

Nascon currently trades below intrinsic value when benchmarked against its trailing earnings power. Assuming conservative FY 2025 EPS of ₦20 (annualized from H1), and applying a modest P/E of 10x, we derive a fair value estimate of ₦200 per share, signaling significant upside from current levels. The current market is yet to price in the magnitude of this recovery.

Nascon’s H1 2025 performance highlights a structurally improving business with strong pricing power, efficient operations, and a clean balance sheet. Despite temporary cost pressures and tax drag, the company’s earnings momentum, capital efficiency, and growing liquidity profile make it a compelling investment for both growth and income investors.

Long-term holders should benefit from sustained profit growth, potential dividend upsides, and re-rating of the stock as earnings normalize and investor sentiment rebounds.