Airtel Africa adds the most market cap in August. Is it still worth buying?

Nigerian equities ended August on a weaker note, with the NGX All-Share Index falling 0.44% during the month to 244,199.39 points.

Market capitalisation also slipped 0.37% to 157.74 trillion, as investors took profits after the market’s strong run earlier in the year.

Yet beneath that modest decline was a more selective market, with investors moving towards stocks they believed still offered earnings and valuation opportunities.

Airtel’s extraordinary run

Airtel Africa added more market capitalisation than any other stock in August. Its shares rose 8.59%, taking the price from N5,801.40 at the end of July to N6,300 and adding about N1.87 trillion to its market value.

By the end of August, Airtel Africa was worth N23.68 trillion, making it the most capitalised company on the NGX.

That is a remarkable position for a stock that began the year at N2,270. In eight months, it has delivered a return of about 177.5%, more than three times the gain of the broader market.

The obvious question is: what happened between December and August to make investors value Airtel Africa so much more highly or were there other contributing factors?

The earnings behind the rally

The answer might be found in part in its increasing earnings. By the June quarter, Airtel Africa’s revenue had risen 31% to $1.85 billion, while profit before tax increased 32% to $360 million.

But the more revealing change was underneath those headline numbers. Data usage per customer rose from 7.8GB to 10.6GB a month, pushing data traffic up 56.3%. Airtel Money’s transaction value also grew 51.5%.

In other words, Airtel is not simply adding customers. The customers it already has are using more of the network and its financial services.

Also, Nigeria is making that story even stronger. In the June quarter, Nigerian revenue rose 29.4% in constant currency, while data revenue increased 38% and EBITDA grew 36.5%.

That is happening against a Nigerian telecoms market that grew 10.38% in real terms in Q2, more than twice the pace of the wider economy according to GDP Q2 2026 report.

Growth comes at a cost

But the Q1 2027 financial statements suggest that the growth is not free.

• Airtel spent $389 million on capital expenditure in the June quarter, compared with $121 million a year earlier.

The spending is necessary to expand capacity, but it creates the next test for the business: whether today’s investment can produce enough additional cash tomorrow.

• So far, there is some comfort here. Operating free cash flow increased 23% to $183 million, while net leverage improved.

There is also a second potential growth story sitting inside Airtel Africa. Management plans to list Airtel Money in London, a move that could put a separate value on a business with more than 54 million customers and $1.35 billion in 2026 revenue.

Yes, while all of this might make the rally easier to understand, but it does not answer whether someone buying at N6,300 is still getting a good deal.

Now the price is the question

Airtel Africa closed August at a new 52-week high reached on August 10, with investors paying roughly N25 for every N1 of trailing earnings. The stock also trades at about five times book value, while the dividend yield is only around 1.6%.

Those numbers might not necessarily mean the company is too expensive; it could be that the market is already expecting a lot from it.

• At N2,270, investors were betting on a recovery. At N6,300, they are betting that the recovery will continue strongly enough to justify a much higher valuation.
• That distinction is already showing up in analyst views. Cordros in its reports of July 23 expects Airtel Africa’s revenue to grow 24% in FY2027 and EPS to rise 93%.
• It consequently raised its target price to N6,782.60. But despite the stronger earnings outlook, it changed its recommendation from Buy to Hold, because the share price had already reflected much of the improvement.

So, it becomes important to note that a good company does not automatically make every price a good entry point.

The dividend provides little protection against a correction because the yield is relatively low. The investment case therefore depends mainly on future earnings growth and further increases in the share price.

There is also a liquidity issue worth understanding. Airtel Africa’s ownership is highly concentrated, with Airtel Africa Mauritius holding 62.73% as of July 31.

That means the N23.68 trillion market value does not represent N23.68 trillion worth of shares freely changing hands on the NGX.

So, is Airtel Africa still worth buying?

At N6,300, the stock is no longer an obvious bargain, but neither is the rally entirely disconnected from the business.

• Earnings are improving, and the growth in Nigeria, data and Airtel Money gives the company a credible case for a higher valuation.

The caution is that Airtel Africa is relatively thinly traded. Only 2.06 million shares, about 0.055% of the 3.76 billion outstanding, changed hands between June and August.

• That means relatively small amounts of buying can move the quoted price and, in turn, revalue the entire company.
• The 177.5% gain should therefore not be treated as N15 trillion of fresh money flowing into the stock.

The evidence suggests Airtel Africa deserves much of its re-rating, but N6,300 leaves far less room for error.

For investors buying now, the question is no longer simply whether Airtel Africa is recovering, but whether earnings can grow fast enough to justify N6,300.

• At that price, investors are paying about N25 for every N1 of trailing earnings. Even 20% earnings growth would only bring that multiple down to about 21x, while 40% growth would take it to roughly 18x.

That puts the investment question in clearer terms: can Airtel Africa deliver enough earnings growth to make today’s N6,300 price look cheaper over time?

Cordros expects 93% EPS growth in FY2027, although that is a forecast rather than something investors should take for granted.

It values Airtel Africa at N6,782.60, based on a N5,801.40 share price at the time of its August 3, 2026, report, representing 16.9% upside. With the stock subsequently closing August at N6,300, that potential upside has narrowed to just 7.7%.

The decision to raise the target price but move the stock from Buy to Hold is telling. Cordros sees stronger earnings ahead, but the share price has risen quickly enough that investors now have less room for error.

Still, there is a more optimistic way to look at the valuation. If Airtel Africa delivers the 93% EPS growth forecast by Cordros, earnings could rise from N252 to N486 per share. At a 16.7x earnings multiple, that would imply a share price of about N8,100, or 29% above N6,300.

That is the opportunity, but it depends on the forecast becoming reality, and Airtel must deliver.