Period Under Preview: 9-Months 2025
Current Share Price: N17.35
Price At Release Date: N12.70
Latest Final Dividend: N0.0125
Latest Interim Divided: Nil
Estimated Beta Value: 0.59x
Estimated Intrinsic Value: N4.82
Rating: Watch
Analyst: Jeariogbe Tunde Segun
The Company
E-Tranzact International Plc is a pioneering Nigerian financial technology company established in September 2003 as a private limited liability company to offer electronic payment solutions. It is recognized as one of Africa’s premier electronic transaction switching and payment processing platforms, serving as a critical infrastructure provider for banks, businesses, and government institutions.
At inception, it had an initial capital of N1,000,000, and quickly evolved from a simple pay outlet for services like Econet Wireless Limited (now Airtel) and the Lagos State Water Corporation into a comprehensive, multi-channel payment solution provider. In 2009, E-Tranzact became a publicly listed company on the Nigerian Stock Exchange (now Nigerian Exchange Limited).
The company operates as an integrated payment processor with services spanning mobile banking, card payments, Automated Teller Machines (ATM), Point of Sale (PoS), and web-based transactions.
The Numbers
At the end of the nine months period, the management of E-Tranzact reported a turnover of N20.114 billion, 8.26% below the N21.924 billion reported at the end of the corresponding quarter in 2024. Direct Cost of Sales for the period is estimated at N10.208 billion, down from N14.528 billion in the same period. Operating Profit was estimated at N3.141 billion, compared to N2.892 billion in the comparable period.
Operating Expenses amounted to N6.763 billion from N2.892 billion in 2024, following which Profit before Tax stood at N3.438 billion from N3.058 billion in the same quarter of last year. After considering the Tax Expenses, total Profit for the quarter was estimated at N2.407 billion versus N2.140 billion of last quarter. See the below table for details:
Also, at the end of the quarter under review, Current Assets was valued at N21.328 billion, slightly higher than the N21.034 billion of the previous quarter. Non-Current Assets valuation stood at N4.106 billion against N2.485 billion. Thus, Total Assets amounted to N25.435 billion as against N23.520 billion in the corresponding quarter. On the other hand, Current Liability estimate was N9.093 billion against N9.618 billion, Non-Current Liability stood at N212.982 million against N283.254 million, thereby putting the Total Liabilities figure at N9.306 billion versus N9.901 billion. Net Assets is now N16.128 billion from N13.618 billion. Retained Earnings is positive at N4.153 billion versus N1.643 billion. See the above table for details:
Financial Strength Ratios
- Debt Ratio: As shown in the table below, the Debt Ratio of Etranzact is currently 36.59%, against the previous 42.10%. This means that only 36.59% of Etranzact’s assets are financed through debt, down significantly from the prior year’s ratio. The decline signals reduced leverage and lower financial risk. Observe that for a Fintech/Payment company, this is positive because it improves resilience against revenue volatility and regulatory shocks.
- Total Debt to Equity Ratio: The Ratio moved from 72.71% to the current 57.71%, indicating that debt relative to shareholders’ funds has dropped sharply. A sub-60% ratio suggests the company is not aggressively leveraged and is increasingly funded by owners rather than lenders.
- Equity Ratio: Is currently 63.41% Vs 57.90%. This means that, equity now funds over 63% of Total Assets, which is a strong position. The rising equity ratio aligns with the falling debt metrics and shows capital strengthening. This gives Etranzact more shock-absorbing capacity during downturns.
Overall Verdict for Financial Ratios: The company is moving towards a more conservative, stable, and sustainable capital structure, which is especially positive for a fintech operating in a regulated and competitive environment like Nigeria.
Profitability Ratio
- EBITDA Margin: 15.62% Vs 13.19%: Operating profit has improved meaningfully, which suggests a better cost control, stronger pricing, or improved transaction mix. For a payment/fintech company, a rising EBITDA margin often reflects scale benefits and operational discipline. This also suggests that core operations are more efficient, earnings quality is improving, and operating leverage is positive.
- Pre-Tax Margin: 17.10% Vs 13.95%. Profit before Tax has grown faster than revenue, indicating lower finance costs, and improved non-operating performance. The jump reinforces that profitability gains are not just operational but bottom line-driven. We can therefore interpret this further as: stronger earnings conversion, reduced drag from interest and overheads, and healthier income statement.
- Cost of Sales to Turnover: 50.75% Vs 66.27%: This is a dramatic reduction in cost of sales relative to revenue, just as it is one of the strongest signals of the numbers posted by eTranzact in the period under review. It implies better vendor terms, improved platform efficiency, or higher margin products.
- Return on Equity (ROE): 14.37% Vs 15.72%: Despite the stronger margins, ROE dipped marginally, a situation that is likely equity base (retained earnings) that dilutes ROE even when profits rise. Importantly, this decline is not operational weakness, but a balance sheet effect.
- Return on Assets (ROA): 9.46% Vs 9.10%: Assets base has improved which means that Etranzact is extracting more profit from each Naira of assets. Similarly, this rise aligns well with the improved cost structure and margins.
Overall Verdicts of Profitability Ratios: Profitability is structurally improving, driven by cost efficiency and operating leverage, while the mild ROE drop reflects a healthier, less leveraged balance sheet, rather than weakening performance.
Efficiency Ratio
- Operating Expenses to Turnover Ratio: 33.63% Vs 20.545. Operating expenses are now consuming a much larger portion of revenue, suggesting cost creep in areas like staff cost, IT Infrastructures, marketing, compliance and others. While margins improved earlier, this jump indicates that profitability gains are being partially offset by rising overheads. This can be interpreted as: weak operating cost discipline, expansion or restructuring cost are likely.
- Turnover to Total Assets: 79.08% Vs 93.21%. Asset turnover has declined, meaning assets are generating less revenue than before, which may translate to: new assets not yet fully productive, idle cash balances, or investment in platforms, or systems awaiting scale.
Overall Verdict of Efficiency Ratio: E-tranzact appears to be in an investment, or expansion phase. While this pressures efficiency ratios now, the earlier margin improvements suggest that its core business remains sound. The key question going forward is whether revenue growth will catch up with the higher cost and asset base.
Investment Ratios
- Earnings Per Share (EPS): N0.26 Vs N0.23. The EPS growth confirms that profits attributable to shareholders increased which aligns with the improved margins and ROA seen earlier. Note that growth is modest but positive and real and not dilution-driven, showing improvement in shareholders’ earnings, quality growth signals and still low absolute EPS level.
- Pe-Ratio: 48.54x Vs 32.23x. The stock is now trading at a much higher multiple, reflecting either of the followings: rise in share price faster than earnings, or strong market optimism about future growth prospects, especially since the company recently exited negative retained earnings position. For a company with weakening efficiency, this valuation looks stretched.
- Earnings Yield: 2.05% Vs 3.10%. Falling earnings yield is the inverse effect of the rising P/E. At just 2.05%, returns are well below risk-free alternatives. This weakens the stock’s appeal for income-oriented or value investors.
- Book Value per Share: N1.75 Vs N5.07. This shows growth in shareholders equity per share, not erosion. The increase suggests retained earnings accumulation and balance sheet strengthening which aligns with the rising equity ratio, improved ROA and reduced leverage.
Final Verdict for Investment Ratio: We can conclude that Etranzact is taking the right step operationally, but the stock price already reflects a lot of optimism. This stock is best suited for patient growth investors, not bargain hunters- unless earnings growth accelerates meaningfully in coming quarters.
Overall Verdict: We can conclude that the numbers are improving, even if not yet optimal. Etranzact delivered a solid operational recovery in Q3 2025, and this is marked by:
- Stronger balance sheet (lower leverage, higher equity funding)
- Clear margin expansion, driven mainly by lower cost of sales
- Improving asset profitability
However, this was partially offset by: The rising operating expenses, weaker asset turnover, and a valuation that now runs ahead of fundamentals. This company appears to be in a transition/investment phase and is doing the right strategic things, although still paying short-term efficiency costs. The bottom line shows a company that is improving in the right direction, a situation the market has already noticed. Future upside price movement now depends on revenue catching up with the higher cost and asset base.
