The Initiates Plc (TIP) has been on a bullish run, outperforming both its sector and the broader market.
As of the close of trading on September 26, 2025, TIP shares had gained 429% year-to-date, ranking it third-best on the NGX behind Beta Glass and Mutual Benefit Assurance.
The stock returned 117.4% in 2024, extending an impressive long-term performance.
Since its listing at N0.85 per share on October 26, 2016, TIP has surged by 1,455% to close at N13.22 last week.
For early investors, the rally has been nothing short of transformational: a N1 million investment at listing is now worth N14.55 million.
But what exactly is fueling this rally?
A closer look reveals an equally striking trend: increased insider participation.
- Between August 5th and September 26th, the company disclosed a wave of directors’ dealings.
- In August alone, 22 insider transactions were reported, followed by another 13 in September.
When paired with rising trading volumes, it suggests that the rally is being driven not just by speculation but by a broader conviction in TIP’s outlook.
For many investors, this level of insider buying signals confidence from those closest to the business.
The Initiates is the 52nd most traded stock on the Nigerian Exchange over the past three months.
During this period, 229 million shares worth N2.85 billion exchanged hands in an unusually active run for a mid-tier company in its space.
Notwithstanding, the company’s free float as of June 2025 was 43% and most likely to maintain the free flow compliance despite recent insider dealings.
That said, another key reason that could be driving TIP’s rally is its financial performance.
Financial performance:
In its recent outing for the first half of 2025, TIP posted a total revenue of N3.388 billion, compared to N1.015 billion in H1 2024, representing a remarkable 233.9% growth and well above its 5-year CAGR of 58%.
Net profit after tax stood at N926 million, a sharp improvement from N124 million reported as of June 30, 2024, an impressive 647% jump.
A look at the financials shows that this growth was driven by strong topline performance, which grew relatively faster than the direct and overhead expenses.
The company made a lot of money, about N2.5 billion, from its waste management service contracts, especially from TDU Kwale, which generated about N2.16 billion in H1 2025. With revenue from e-waste and incineration rising, it appears the outlook is promising
This turnaround is even more significant when viewed against the company’s history.
Over the past five years, TIP reported losses in 2020, 2021, and 2022, before returning to profitability in 2023 and 2024.
Consequently, it reinstated dividend payouts, rewarding shareholders with N0.06 per share in 2023, which was raised to N0.10 per share in 2024, supported by profit after tax of N348 million in 2023 and N1.340 billion in 2024.
Given the strong H1 2025 results, investors may anticipate another upward review of dividend payout for the current financial year.
If TIP sustains its momentum through the second half, full-year profit could settle between N1.8–N2.0 billion. Based on its recent payout ratios of 10–15%, this translates into a potential dividend of N0.12 – N0.20 per share, higher than the N0.10 distributed in 2024.
Valuation
Apart from financial performance and trading liquidity, what is the stock worth, not the market noise?
Despite the sharp price rally, the stock appears not overvalued on an earnings basis. At a P/E ratio of 5.5x, TIP trades below the industry average, suggesting the stock is still attractively valued on an earnings basis.
However, with a P/B ratio of 3.6x, the market is clearly rewarding growth prospects over asset backing.
With H1 2025 revenue already at 73% of last year’s full-year figure and profits on track to double, the rally reflects confidence in the company’s earnings momentum rather than its current asset base.
Takeaway for investors:
The stock looks expensive relative to book value, but the earnings momentum and revenue growth justify the rally.
It’s a growth story investors are betting on TIP’s ability to keep scaling profits and dividends, which the company must sustain.
Entrepreneurial Angle
The rally is not just a reflection of TIP’s numbers but also a signal to investors and entrepreneurs:
Nigeria’s waste management sector appears to be becoming more profitable, compliance-driven, and ripe for investment.
Beyond TIP’s own internal measures and strategies, external factors might be at play.
- TIP operates in a growing niche of environmental services and industrial cleaning, where stricter waste management regulations and Nigeria’s push for sustainability are driving new demand.
- With clients in oil and gas, manufacturing, and municipal services, the sector is strategically placed to benefit from compliance-driven outsourcing.
For investors and entrepreneurs, this rally signals that the sector is transitioning from a low-margin utility space into a compliance-driven, high-opportunity industry.
TIP puts its gross profit and net profit margins at 48% and 27% respectively.
Perspective
Although TIP’s management and board have expressed satisfaction with the company’s consistent revenue growth and ability to sustain performance, there is still room for scaling and operational efficiency.
With trade receivables of N3.9 billion constituting the bulk of total assets and N1.9 billion tied up in property, plant, and equipment, TIP’s balance sheet reflects both opportunities and constraints.
The company has reported a negative five-year free cash flow of N269 million, pointing to two critical issues:
- Cash inflows lag revenue growth due to collection constraints.
- Expansion efforts are outpacing internal cash generation, thus requiring either improved working capital management or external funding.
However, with a very low gearing ratio of 0.06, TIP has significant headroom to prudently take on moderate borrowing. This would unlock liquidity, support scaling, and sustain momentum.
For investors, this suggests that the rally is not just driven by present earnings strength but also by TIP’s untapped capacity to leverage its asset base more effectively for future growth.
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