Growth Investors: Industry Analysts Just Upgraded Their Mahindra CIE Automotive Limited (NSE:MAHINDCIE) Revenue Forecasts By 17%

Mahindra CIE Automotive Limited (NSE:MAHINDCIE) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

After this upgrade, Mahindra CIE Automotive's seven analysts are now forecasting revenues of ₹113b in 2023. This would be a solid 12% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to bounce 36% to ₹21.61. Prior to this update, the analysts had been forecasting revenues of ₹96b and earnings per share (EPS) of ₹20.10 in 2023. The forecasts seem more optimistic now, with a decent improvement in revenue and a modest lift to earnings per share estimates.

Our analysis indicates that MAHINDCIE is potentially undervalued!

It will come as no surprise to learn that the analysts have increased their price target for Mahindra CIE Automotive 11% to ₹344 on the back of these upgrades. 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. The most optimistic Mahindra CIE Automotive analyst has a price target of ₹390 per share, while the most pessimistic values it at ₹270. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Mahindra CIE Automotive's growth to accelerate, with the forecast 9.9% annualised growth to the end of 2023 ranking favourably alongside historical growth of 5.0% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. So it's clear that despite the acceleration in growth, Mahindra CIE Automotive is expected to grow meaningfully slower than the industry average.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for next year. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. There was also a nice increase in the price target, with analysts apparently feeling that the intrinsic value of the business is improving. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Mahindra CIE Automotive.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Mahindra CIE Automotive going out to 2024, and you can see them free on our platform here..

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.