Results: Kajaria Ceramics Limited Beat Earnings Expectations And Analysts Now Have New Forecasts

Kajaria Ceramics Limited (NSE:KAJARIACER) defied analyst predictions to release its third-quarter results, which were ahead of market expectations. It was overall a positive result, with revenues beating expectations by 6.0% to hit ₹8.4b. Kajaria Ceramics also reported a statutory profit of ₹7.48, which was an impressive 29% above what the analysts had forecast. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Kajaria Ceramics

Following the latest results, Kajaria Ceramics' 18 analysts are now forecasting revenues of ₹32.0b in 2022. This would be a major 29% improvement in sales compared to the last 12 months. Per-share earnings are expected to jump 60% to ₹23.14. Before this earnings report, the analysts had been forecasting revenues of ₹30.0b and earnings per share (EPS) of ₹19.57 in 2022. There's been a pretty noticeable increase in sentiment, with the analysts upgrading revenues and making a solid gain to earnings per share in particular.

It will come as no surprise to learn that the analysts have increased their price target for Kajaria Ceramics 24% to ₹773on the back of these upgrades. 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. The most optimistic Kajaria Ceramics analyst has a price target of ₹1,003 per share, while the most pessimistic values it at ₹366. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Kajaria Ceramics' growth to accelerate, with the forecast 29% growth ranking favourably alongside historical growth of 2.1% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Kajaria Ceramics is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Kajaria Ceramics' earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues 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 Kajaria Ceramics. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Kajaria Ceramics going out to 2024, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Kajaria Ceramics that you should be aware of.

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