Kennametal India Limited Just Missed Earnings - But Analysts Have Updated Their Models

Kennametal India Limited (NSE:KENNAMET) shareholders are probably feeling a little disappointed, since its shares fell 5.7% to ₹2,674 in the week after its latest full-year results. It was not a great result overall. While revenues of ₹11b were in line with analyst predictions, earnings were less than expected, missing statutory estimates by 12% to hit ₹39.91 per share. Following the result, the analyst has 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. We've gathered the most recent statutory forecasts to see whether the analyst has changed their earnings models, following these results.

View our latest analysis for Kennametal India

Taking into account the latest results, the consensus forecast from Kennametal India's solitary analyst is for revenues of ₹12.4b in 2024. This reflects a meaningful 15% improvement in revenue compared to the last 12 months. Per-share earnings are expected to bounce 56% to ₹62.34. Before this earnings report, the analyst had been forecasting revenues of ₹12.4b and earnings per share (EPS) of ₹63.77 in 2024. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analyst did make a minor downgrade to their earnings per share forecasts.

Despite cutting their earnings forecasts,the analyst has lifted their price target 6.0% to ₹2,934, suggesting that these impacts are not expected to weigh on the stock's value in the long term.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's clear from the latest estimates that Kennametal India's rate of growth is expected to accelerate meaningfully, with the forecast 15% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 4.4% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analyst also expect Kennametal India to grow faster than the wider industry.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Kennametal India. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analyst clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2025, which can be seen for free on our platform here.

You should always think about risks though. Case in point, we've spotted 1 warning sign for Kennametal India you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.