Safaricom share price hits all-time high of Sh17.5

What you need to know:

  • The new high represents a 250 per cent return on the Sh5 at which the stock sold to the market in its initial public offering (IPO) in 2008.
  • The firm’s market capitalisation stood at Sh700 billion at the end of trading last week.

On Friday, Safaricom’s share price hit an all-time high of Sh17.5, continuing a recent trend of improved fortunes at the stock market.

This followed another high a day earlier when the price hit Sh17 per share largely due to increased demand by local investors.

The new high represents a 250 per cent return on the Sh5 at which the stock sold to the market in its initial public offering (IPO) in 2008.

Analysts said the rally was driven by demand from local investors, with foreign investors being suppliers of the stock in anticipation of a surge in earnings for the year ending March 2015.

Mr Eric Musau, an analyst at Standard Investment Bank (SIB), attributed the price rise to speculation by investors ahead of the release of the full-year results.

Already holding the title of the most valuable company on the Nairobi Securities Exchange (NSE), the telecoms operator is riding on phenomenal growth registered in mobile banking services to post higher gains.

The firm’s market capitalisation stood at Sh700 billion at the end of trading last week.

In the last financial year, the telco made Sh23 billion in profit after tax, maintaining its position as the most profitable company in East and Central Africa.

A forecast by an analyst at SIB before the announcement of Safaricom’s results for the full year ending March 2014 indicated the telco would report a net profit of Sh28.7 billion (in the year ending 2015).

In the six-month period to September 2014, the mobile phone operator’s profit after tax stood at Sh14.7 billion, more than half the projection by SIB. 

The telco now sees continued uptake of mobile payment, M-Pesa’s ongoing integration with financial and bill payment services, as well as Internet services, as offering great opportunities for growth.

While some analysts say Facebook’s planned roll out of a mobile payments system in Kenya may eat into M-Pesa’s future business opportunities, the telco thinks otherwise.