Rainbows and Unicorns: Lumax Auto Technologies Limited (NSE:LUMAXTECH) Analysts Just Became A Lot More Optimistic

Shareholders in Lumax Auto Technologies Limited (NSE:LUMAXTECH) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The consensus statutory numbers for both revenue and earnings per share (EPS) increased, with their view clearly much more bullish on the company's business prospects.

After this upgrade, Lumax Auto Technologies' twin analysts are now forecasting revenues of ₹13b in 2022. This would be a major 32% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 82% to ₹8.60. Prior to this update, the analysts had been forecasting revenues of ₹12b and earnings per share (EPS) of ₹6.50 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Lumax Auto Technologies

With these upgrades, we're not surprised to see that the analysts have lifted their price target 22% to ₹132 per share. 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 Lumax Auto Technologies, with the most bullish analyst valuing it at ₹137 and the most bearish at ₹126 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Lumax Auto Technologies is an easy business to forecast or the underlying assumptions are obvious.

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 Lumax Auto Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 32% revenue growth noticeably faster than its historical growth of 3.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Lumax Auto Technologies to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. With a serious upgrade to expectations and a rising price target, it might be time to take another look at Lumax Auto Technologies.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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