Sona BLW Precision Forgings Limited Just Recorded A 15% EPS Beat: Here's What Analysts Are Forecasting Next

Shareholders might have noticed that Sona BLW Precision Forgings Limited (NSE:SONACOMS) filed its full-year result this time last week. The early response was not positive, with shares down 6.4% to ₹595 in the past week. It looks like a credible result overall - although revenues of ₹21b were in line with what the analysts predicted, Sona BLW Precision Forgings surprised by delivering a statutory profit of ₹6.21 per share, a notable 15% above expectations. 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.

See our latest analysis for Sona BLW Precision Forgings

Following the latest results, Sona BLW Precision Forgings' nine analysts are now forecasting revenues of ₹29.6b in 2023. This would be a sizeable 39% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 26% to ₹7.78. In the lead-up to this report, the analysts had been modelling revenues of ₹30.6b and earnings per share (EPS) of ₹8.60 in 2023. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

Despite the cuts to forecast earnings, there was no real change to the ₹647 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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. There are some variant perceptions on Sona BLW Precision Forgings, with the most bullish analyst valuing it at ₹769 and the most bearish at ₹473 per share. 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 Sona BLW Precision Forgings shareholders.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that Sona BLW Precision Forgings' rate of growth is expected to accelerate meaningfully, with the forecast 39% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 11% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sona BLW Precision Forgings is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Sona BLW Precision Forgings' revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. At Simply Wall St, we have a full range of analyst estimates for Sona BLW Precision Forgings going out to 2025, and you can see them free on our platform here..

We also provide an overview of the Sona BLW Precision Forgings Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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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.