ELGI Equipments Limited (NSE:ELGIEQUIP) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. The company beat both earnings and revenue forecasts, with revenue of ₹5.5b, some 7.2% above estimates, and statutory earnings per share (EPS) coming in at ₹1.09, 21% ahead of 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
After the latest results, the three analysts covering ELGI Equipments are now predicting revenues of ₹20.9b in 2022. If met, this would reflect a decent 18% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to jump 121% to ₹4.20. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹20.7b and earnings per share (EPS) of ₹4.03 in 2022. So the consensus seems to have become somewhat more optimistic on ELGI Equipments' earnings potential following these results.
The consensus price target rose 18% to ₹142, suggesting that higher earnings estimates flow through to the stock's valuation as well. 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. There are some variant perceptions on ELGI Equipments, with the most bullish analyst valuing it at ₹147 and the most bearish at ₹128 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that ELGI Equipments' rate of growth is expected to accelerate meaningfully, with the forecast 18% revenue growth noticeably faster than its historical growth of 6.8%p.a. 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. Factoring in the forecast acceleration in revenue, it's pretty clear that ELGI Equipments is expected to grow much faster than its industry.
The Bottom Line
The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards ELGI Equipments 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. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that in mind, we wouldn't be too quick to come to a conclusion on ELGI Equipments. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple ELGI Equipments analysts - going out to 2025, and you can see them free on our platform here.
Even so, be aware that ELGI Equipments is showing 3 warning signs in our investment analysis , you should know about...
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