The Nairobi Securities Exchange (NSE) has been bullish for the better part of 2024, gaining 24.9% year to date benefitting mainly from gains in the banking, energy and construction sectors.
- Safaricom has however been trading below its All-Time High of KSh 45.25 realized in August 2021.
- The telco’s share price has gained 10.8% since the year began closing Monday at KSh 15.40.
- Safaricom Plc trades on the NSE under the ticker symbol SCOM and is currently the most valuable stock on the bourse with a market capitalization of KSh 617 billion – about 34.6% of the equity market compared to almost 70% in November 2021.
“When you look at the consensus around analysts, they say anywhere between 25 and 27 Shillings, that’s a 50 percent upside” Safaricom CEO Peter Ndegwa said in a recent interview.
Safaricom’s CEO notes that foreign investor flight coupled with the previous liquidity pressures stood out as challenges. However, Ndegwa maintained positivity holding that Safaricom’s underlying performance is “good”.
“Safaricom stock benefits when the market goes up and loses when the market goes down if it is a macro issue,” Ndegwa noted.
Safaricom’s investment in Ethiopia prompted cautious optimism towards investors general outlook with the break even year lengthened to 2027 owing to the currency reforms in the Horn of Africa country.
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Persistent liquidity challenges with limits on repatriation of local currency in most frontier markets including Kenya, especially in 2023, spilling over to the early months of 2024 led to exits by foreign investors, affecting Blue chip stocks including Safaricom.
However, Ndegwa noted that the recent developments in major economies including aggressive interest rate cuts is likely to drive foreign investors towards frontier markets due to attractive returns.
“The NSE will benefit from this because Kenya is fairly stable. Most of the other countries have had challenges – forex challenges and devaluation.”
Ndegwa pointed out that the repricing of Fintech stocks during Covid years affected MPESA, being the biggest fintech in Africa maintaining that Safaricom’s underlying performance is good.
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