Earnings Beat: Kajaria Ceramics Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models

Kajaria Ceramics Limited (NSE:KAJARIACER) just released its latest half-yearly results and things are looking bullish. The company beat both earnings and revenue forecasts, with revenue of ₹9.9b, some 5.9% above estimates, and statutory earnings per share (EPS) coming in at ₹5.60, 23% ahead of expectations. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Kajaria Ceramics

Taking into account the latest results, the most recent consensus for Kajaria Ceramics from 19 analysts is for revenues of ₹25.2b in 2021 which, if met, would be a satisfactory 5.9% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 32% to ₹14.41. Before this earnings report, the analysts had been forecasting revenues of ₹23.4b and earnings per share (EPS) of ₹10.07 in 2021. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a very substantial lift in earnings per share in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 25% to ₹575per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Kajaria Ceramics at ₹685 per share, while the most bearish prices it at ₹411. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Kajaria Ceramics shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Kajaria Ceramics' rate of growth is expected to accelerate meaningfully, with the forecast 5.9% revenue growth noticeably faster than its historical growth of 3.2%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 17% next year. So it's clear that despite the acceleration in growth, Kajaria Ceramics is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Kajaria Ceramics following these results. They also upgraded their revenue estimates for next year, even though sales are expected to grow slower than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Kajaria Ceramics analysts - going out to 2023, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Kajaria Ceramics that we have uncovered.

If you decide to trade Kajaria Ceramics, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.