Varroc Engineering Limited (NSE:VARROC) Annual Results Just Came Out: Here's What Analysts Are Forecasting For This Year

Varroc Engineering Limited (NSE:VARROC) shareholders are probably feeling a little disappointed, since its shares fell 7.3% to ₹385 in the week after its latest yearly results. Revenues were in line with expectations, at ₹114b, while statutory losses ballooned to ₹46.75 per share. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Varroc Engineering

After the latest results, the seven analysts covering Varroc Engineering are now predicting revenues of ₹136.4b in 2022. If met, this would reflect a meaningful 20% improvement in sales compared to the last 12 months. Earnings are expected to improve, with Varroc Engineering forecast to report a statutory profit of ₹2.72 per share. Before this earnings report, the analysts had been forecasting revenues of ₹133.9b and earnings per share (EPS) of ₹17.52 in 2022. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹466, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Varroc Engineering, with the most bullish analyst valuing it at ₹570 and the most bearish at ₹340 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 Varroc Engineering shareholders.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Varroc Engineering's past performance and to peers in the same industry. The analysts are definitely expecting Varroc Engineering's growth to accelerate, with the forecast 20% annualised growth to the end of 2022 ranking favourably alongside historical growth of 3.7% 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 16% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Varroc Engineering to grow faster than the wider 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. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. The consensus price target held steady at ₹466, with the latest estimates not enough to have an impact on their price targets.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Varroc Engineering going out to 2023, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 2 warning signs for Varroc Engineering that you need to be mindful of.

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