(Nairobi) – The Nairobi Securities Exchange (NSE) has shown strong performance in 2024, with a 24.9% rise year-to-date, primarily driven by gains in the banking, energy, and construction sectors. Despite this growth, Kenya’s largest telecommunications company, Safaricom, has seen its share price remain significantly below its all-time high.
Safaricom’s stock, which reached a peak of KSh 45.25 in August 2021, has gained 10.8% so far this year, closing at KSh 15.40 on Monday. With a market capitalization of KSh 617 billion, Safaricom remains the most valuable stock on the NSE, accounting for approximately 34.6% of the equity market. This figure, however, is notably lower than the almost 70% market share it held in November 2021.
In a recent interview, Safaricom CEO Peter Ndegwa expressed optimism about the company’s stock valuation. Citing industry analysts, he pointed out that Safaricom’s shares could be worth between KSh 25 and KSh 27, representing a potential 50% upside. Ndegwa noted that this undervaluation is largely due to external factors, including foreign investor exits and liquidity pressures that have affected the overall market.
Ndegwa attributed part of the stock’s recent volatility to foreign investor withdrawals and persistent liquidity issues, particularly in 2023 and early 2024. These challenges have impacted many blue-chip stocks on the NSE, including Safaricom, but he believes the company’s underlying performance remains solid.
Safaricom’s significant investment in Ethiopia has added complexity to investor sentiment. Although the company’s break-even timeline in Ethiopia has now been extended to 2027 due to currency reforms in the country, Ndegwa remains confident about the long-term potential of this market.
| Key Safaricom Figures | Value |
|---|---|
| Market Capitalization | KSh 617 billion |
| Current Share Price | KSh 15.40 |
| Analyst Consensus Value | KSh 25 – KSh 27 |
| Potential Upside | 50% |
The CEO also pointed to macroeconomic factors affecting Safaricom’s performance, noting that when the broader market faces challenges, Safaricom’s stock typically follows suit. He added that the NSE could soon benefit from a return of foreign investors, as aggressive interest rate cuts in major economies are likely to shift investor interest toward stable frontier markets, including Kenya.
Ndegwa explained that while Safaricom’s MPESA business remains a valuable asset, the fintech sector’s repricing in the post-COVID years impacted MPESA’s valuation. However, he stressed that the company’s core financial performance remains strong, with a solid foundation to support future growth.
The current economic environment in major markets may ultimately drive more investors to frontier markets like Kenya, with Safaricom’s CEO seeing an opportunity for significant foreign investment inflows.