Hitachi Energy India Limited Just Missed EPS By 7.0%: Here's What Analysts Think Will Happen Next

It's been a sad week for Hitachi Energy India Limited (NSE:POWERINDIA), who've watched their investment drop 13% to ₹2,824 in the week since the company reported its annual result. Revenues of ₹38b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹35.80, missing estimates by 7.0%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Hitachi Energy India

After the latest results, the dual analysts covering Hitachi Energy India are now predicting revenues of ₹48.2b in 2022. If met, this would reflect a sizeable 28% improvement in sales compared to the last 12 months. Per-share earnings are expected to expand 13% to ₹40.30. In the lead-up to this report, the analysts had been modelling revenues of ₹43.4b and earnings per share (EPS) of ₹60.60 in 2022. Although sales sentiment has improved substantially, the analysts have made a pretty serious reduction to per-share earnings estimates, suggesting that the growth is not without cost.

Curiously, the consensus price target rose 48% to ₹3,449. We can only conclude that the forecast revenue growth is expected to offset the impact of the expected fall in earnings.

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. It's clear from the latest estimates that Hitachi Energy India's rate of growth is expected to accelerate meaningfully, with the forecast 28% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 10% over the past year. 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. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Hitachi Energy India to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Hitachi Energy India. Long-term earnings power is much more important than next year's profits. At least one analyst has provided forecasts out to 2024, which can be seen for free on our platform here.

Before you take the next step you should know about the 1 warning sign for Hitachi Energy India that we have uncovered.

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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.