Graphite India Limited Recorded A 8.9% Miss On Revenue: Analysts Are Revisiting Their Models

It's been a pretty great week for Graphite India Limited (NSE:GRAPHITE) shareholders, with its shares surging 18% to ₹417 in the week since its latest third-quarter results. Revenues came in 8.9% below expectations, at ₹5.0b. Statutory earnings per share were relatively better off, with a per-share profit of ₹2.30 being roughly in line with analyst estimates. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Graphite India

After the latest results, the four analysts covering Graphite India are now predicting revenues of ₹32.7b in 2022. If met, this would reflect a major 64% improvement in sales compared to the last 12 months. Graphite India is also expected to turn profitable, with statutory earnings of ₹28.50 per share. In the lead-up to this report, the analysts had been modelling revenues of ₹31.9b and earnings per share (EPS) of ₹21.33 in 2022. So it seems there's been a definite increase in optimism about Graphite India's future following the latest results, with a massive increase in the earnings per share forecasts in particular.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 58% to ₹329per share. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Graphite India, with the most bullish analyst valuing it at ₹394 and the most bearish at ₹185 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Graphite India's past performance and to peers in the same industry. The analysts are definitely expecting Graphite India's growth to accelerate, with the forecast 64% growth ranking favourably alongside historical growth of 3.0% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 17% next year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Graphite India to grow faster than the wider 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 Graphite India following these results. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is 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.

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 Graphite India going out to 2024, and you can see them free on our platform here..

Even so, be aware that Graphite India is showing 1 warning sign in our investment analysis , you should know about...

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