L&T Finance Holdings Limited Just Beat Revenue By 6.7%: Here's What Analysts Think Will Happen Next

It's been a good week for L&T Finance Holdings Limited (NSE:L&TFH) shareholders, because the company has just released its latest quarterly results, and the shares gained 6.3% to ₹65.00. Results overall were respectable, with statutory earnings of ₹8.46 per share roughly in line with what the analysts had forecast. Revenues of ₹16b came in 6.7% ahead of analyst predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for L&T Finance Holdings

Following last week's earnings report, L&T Finance Holdings' twelve analysts are forecasting 2021 revenues to be ₹64.5b, approximately in line with the last 12 months. Statutory earnings per share are expected to descend 15% to ₹5.91 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ₹64.8b and earnings per share (EPS) of ₹5.50 in 2021. So the consensus seems to have become somewhat more optimistic on L&T Finance Holdings' earnings potential following these results.

There's been no major changes to the consensus price target of ₹74.58, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on L&T Finance Holdings, with the most bullish analyst valuing it at ₹91.07 and the most bearish at ₹50.04 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with the forecast 1.5% revenue decline a notable change from historical growth of 26% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - L&T Finance Holdings is expected to lag the wider industry.

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 L&T Finance Holdings following these results. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that L&T Finance Holdings' revenues are expected to perform worse than the wider industry. The consensus price target held steady at ₹74.58, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for L&T Finance Holdings going out to 2023, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with L&T Finance Holdings (including 1 which is a bit unpleasant) .

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