What Should We Expect From The South Indian Bank Limited’s (NSE:SOUTHBANK) Earnings Over The Next Few Years?

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The South Indian Bank Limited’s (NSE:SOUTHBANK) latest earnings update in March 2019 revealed that the business endured a major headwind with earnings deteriorating by -26%. Below, I’ve laid out key growth figures on how market analysts predict South Indian Bank’s earnings growth trajectory over the next few years and whether the future looks brighter. I will be looking at earnings excluding extraordinary items to exclude one-off activities to get a better understanding of the underlying drivers of earnings.

See our latest analysis for South Indian Bank

Analysts’ expectations for the coming year seems buoyant, with earnings climbing by a significant 72%. This strong growth in earnings is expected to continue, bringing the bottom line up to ₹9.4b by 2022.

NSEI:SOUTHBANK Past and Future Earnings, May 12th 2019
NSEI:SOUTHBANK Past and Future Earnings, May 12th 2019

While it’s helpful to be aware of the growth rate each year relative to today’s level, it may be more beneficial to evaluate the rate at which the earnings are growing every year, on average. The benefit of this method is that it ignores near term flucuations and accounts for the overarching direction of South Indian Bank’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I put a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 36%. This means that, we can presume South Indian Bank will grow its earnings by 36% every year for the next couple of years.

Next Steps:

For South Indian Bank, I’ve put together three key aspects you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is SOUTHBANK worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SOUTHBANK is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SOUTHBANK? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.