The Business NG - August 29, 2025

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Editorial Focus

Undervalued or Trapped? Nigeria’s P/B Discount Dilemma

Nigeria’s equity market is once again testing investor sentiment as several companies across banking, insurance, industrials, and real estate trade at steep discounts to book value. With an average price-to-book (P/B) ratio of 0.60, firms such as Zenith Bank, UBA, Access Holdings, FirstHoldCo, Ecobank, Julius Berger, and UPDC REIT are priced as though their net assets are worth more than their shares.

At face value, this suggests bargain opportunities. Yet analysts caution that low valuations often mirror deeper structural weaknesses, governance concerns, or market inefficiencies rather than investor mispricing. The paradox is most striking in the banking sector. Despite strong balance sheets and robust earnings growth, six major lenders trade at an average P/B of just 0.49x. Zenith Bank, UBA, and Ecobank have delivered stellar compound profit growth — 35%, 48%, and 85% respectively — yet remain significantly discounted.

The dilemma is whether investors should see these gaps as hidden value or warning signals. For Nigeria’s capital market to re-rate, transparency, investor confidence, and stronger corporate governance will be as critical as earnings growth. Until then, the undervaluation puzzle will remain unresolved.