Nigeria’s extraordinary stock market rally may be entering a more selective phase, according to Coronation Securities, which is urging investors to remain overweight banking stocks while adopting a more cautious stance on several of the market’s biggest industrial companies.
In its latest Weekly Stock Update, Coronation assigns Buy ratings to First HoldCo, UBA, Access Holdings, Zenith Bank, GTCO, Stanbic IBTC and Wema Bank, arguing that these stocks continue to offer meaningful upside despite the Nigerian Exchange’s powerful gains over the past year.
Among the banks, First HoldCo offers the largest potential upside at 41.4%, followed by Custodian at 40.6%, UBA at 35.5%, Access Holdings at 30.9%, Stanbic IBTC at 25.6%, Wema Bank at 23.3%, Zenith Bank at 20.5%, and GTCO at 18.9%.
Coronation also maintains a Buy recommendation on Nestlé Nigeria, while rating Presco as Hold.
The recommendations come as investors increasingly differentiate between sectors after an exceptional run in Nigerian equities.
Earlier this year, the NGX All-Share Index reached successive record highs, fuelled by banking recapitalisation, strong corporate earnings, improving foreign exchange liquidity and renewed foreign investor interest.
However, Coronation’s report suggests that some of the market’s biggest industrial names may now have limited near-term upside.
The firm has placed Dangote Cement, BUA Cement, Lafarge Africa (WAPCO), Berger Paints and Chemical and Allied Products (CAP) under Under Review, indicating that material developments or valuation considerations require further assessment before fresh investment recommendations are made.
While “Under Review” is not equivalent to a sell recommendation, it signals that analysts believe investors should await additional information before making new allocation decisions.
Coronation has also temporarily suspended coverage of the telecommunications and oil and gas sectors pending completion of an ongoing assessment.
The contrast between Coronation’s bullish stance on financial stocks and its caution toward industrial heavyweights reflects a broader shift taking place across global equity markets.
As major indices recover from recent volatility, investors are becoming increasingly valuation-conscious, rewarding sectors where earnings growth still appears underpriced while taking profits in companies whose share prices have already priced in much of their expected growth.
For Nigerian investors, that increasingly means the next phase of the bull market may depend less on broad market momentum and more on careful stock selection.
