Stock Analysis

CG Power and Industrial Solutions Limited Just Beat Earnings Expectations: Here's What Analysts Think Will Happen Next

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NSEI:CGPOWER
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The yearly results for CG Power and Industrial Solutions Limited (NSE:CGPOWER) were released last week, making it a good time to revisit its performance. It looks like a credible result overall - although revenues of ₹70b were in line with what the analysts predicted, CG Power and Industrial Solutions surprised by delivering a statutory profit of ₹5.21 per share, a notable 13% above expectations. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for CG Power and Industrial Solutions

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NSEI:CGPOWER Earnings and Revenue Growth May 11th 2023

Following the latest results, CG Power and Industrial Solutions' five analysts are now forecasting revenues of ₹84.7b in 2024. This would be a huge 20% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to swell 10% to ₹5.75. In the lead-up to this report, the analysts had been modelling revenues of ₹83.9b and earnings per share (EPS) of ₹5.53 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

There's been no major changes to the consensus price target of ₹326, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values CG Power and Industrial Solutions at ₹370 per share, while the most bearish prices it at ₹270. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

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. For example, we noticed that CG Power and Industrial Solutions' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 20% growth to the end of 2024 on an annualised basis. That is well above its historical decline of 9.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 14% per year. Not only are CG Power and Industrial Solutions' revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around CG Power and Industrial Solutions' earnings potential next year. 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. 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.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for CG Power and Industrial Solutions going out to 2026, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 3 warning signs for CG Power and Industrial Solutions you should be aware of.

Valuation is complex, but we're helping make it simple.

Find out whether CG Power and Industrial Solutions is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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.