Industrial & Medical Gases Nigeria Plc (IMG) has opened its rights difficulty provide working from August 22 to October 2, 2025.
The corporate is providing 199,797,458 peculiar shares of fifty kobo every at N32.00 per share, on the premise of two new peculiar shares for each 5 held as of Could 21, 2025.
At that qualification date, IMG’s share worth stood at N39.85, which means the rights difficulty was floated at a steep 24% low cost to the market.
Since then, nonetheless, the inventory has shed 16%, closing at N33.30 yesterday and recording a year-to-date lack of 12.3%.
This decline now raises the essential query: Does the rights difficulty a purchase for present shareholders current a beautiful entry level for brand spanking new buyers?
A more in-depth have a look at the basics supplies route.
Case for optimism: Robust long-term progress
Over the past 5 years, IMG has demonstrated that it could actually develop:
- Income expanded at a 21.44% CAGR, reaching a cumulative N26.65 billion.
- Revenue grew quicker, at a 34% CAGR, totaling N1.62 billion.
- Money circulate from operations reached N2.9 billion over the interval.
This exhibits an organization that has been in a position to scale each gross sales and earnings constantly, supported by its sturdy place in Nigeria’s healthcare and industrial gases markets.
Its three manufacturing vegetation throughout Lagos, Port Harcourt, and Kaduna give it geographic attain, whereas its broad product combine ensures demand resilience.
For present shareholders, this observe document argues in favor of taking over the rights difficulty as a option to keep invested in an organization with a confirmed progress engine.
Case for warning: Momentum slips
The current image is much less encouraging.
- In H1 2025, IMG posted 19% income progress to N4.23 billion, exhibiting continued demand power.
- Nevertheless, revenue after tax plunged 69% to N476 million, down from N1.52 billion in H1 2024.
The driving force was a pointy drop in international alternate beneficial properties. IMG booked N240 million in FX beneficial properties in H1 2025, in comparison with N1.2 billion in H1 2024.
This decrease windfall considerably compressed revenue, overshadowing in any other case strong topline efficiency.
As well as, the corporate recorded a adverse working money circulate of N281.5 million in H1 2025.
Collectively, the weaker FX tailwind and adverse money circulate spotlight the truth that IMG’s near-term fundamentals are beneath stress.
Valuation: Are the shares costly?
Even after the current worth decline, IMG nonetheless appears to be like dear on conventional metrics:
- P/E ratio of 33x, almost double the trade common of 17x.
- P/S ratio of two.28x, additionally above the trade benchmark of 1.78x.
This implies buyers are already paying a premium for IMG’s progress story.
The rights difficulty at N32 per share provides present shareholders a barely cheaper entry level than the market worth (N33.30), however it doesn’t materially change the premium valuation.
Publish-issue affect
If the rights are absolutely subscribed, excellent shares will rise from 499.5 million to about 699.3 million models, a 40% dilution.
With the present market capitalization of about N18.3 billion, the post-issue valuation will replicate a bigger fairness base
Shareholders’ funds are anticipated to just about double from N5.99 billion to about N12.38 billion, following the injection of recent capital from the provide.
This adjustment will cut back IMG’s price-to-book ratio from 3.45x, already beneath the trade common of 4.4x, to a extra engaging 1.48x, additional strengthening the valuation case post-issue
Nevertheless, whereas this improves IMG’s steadiness sheet power, it additionally signifies that earnings per share (EPS) might come beneath stress until profitability rebounds strongly within the close to time period.
On dividends, IMG paid N0.80 in 2024, up from N0.50 in 2023, translating to a 2.40% yield at present costs.
That is beneath market common, however it displays administration’s effort to reward shareholders regardless of capital calls for.
Nonetheless, dividend revenue alone could not justify the stretched valuation.
Verdict: Two sides of the coin
The rights difficulty comes at a reduction, and for long-term shareholders who consider in IMG’s market management and confirmed progress document, it presents a possibility to deepen publicity at a less expensive worth.
The capital elevate will even strengthen the steadiness sheet, offering funds for enlargement and operational resilience.
Nevertheless, this chance is just not with out caveats. Traders should weigh the short-term earnings stress, sustained adverse free money circulate over 5 years, and a valuation that is still wealthy in comparison with friends.
- For present shareholders: Subscribing is smart if in case you have conviction in IMG’s long-term story. The discounted worth means that you can common down and place for a possible rebound as soon as fundamentals enhance, devoid of FX volatility. Ignoring the provide might imply dilution of your holding
- For potential buyers: The rights difficulty itself is just not straight open to you, however the market worth could regulate after the train. Coming into now’s basically a guess on a medium-to-long-term rebound and continued dividend payouts. Conservative buyers may favor to attend for clearer indicators of money circulate stability earlier than taking a place.
