Custodian Investment last week crossed the N70 mark and seems to be pushing higher. It closed yesterday’s trading session at N73.3

In the last one year, the stock has outperformed the All Share Index, and the NGX Insurance Index.

Trading above book value 

Going by its interim FY 2025 earnings, the book value for the stock is N37.54.

This means that going by yesterday’s price the stock is trading at 1.95X book value. At this price, one can comfortably say the valuation of the stock is a bit frothy. Even compared to other players in the insurance space (though Custodian is an investment holding company, the origins of the firm are in insurance). 

DCF valuation says there may be limited elbow room

A simple discounted cash flow valuation of the firm (using cost of equity at 25.8% and growth at 20%) places the fair value of the stock at N59.49. This means the stock is trading above fair value.

If you adjust for a lower cost of equity or a faster growth rate, then the stock could easily have a fair value of between N87 to N100. The sensitivity table below shows all the possible scenarios.