What Should Investors Know About Schaeffler India Limited’s (NSE:SCHAEFFLER) Future?

In December 2018, Schaeffler India Limited (NSE:SCHAEFFLER) announced its most recent earnings update, which showed that the business gained from a sizeable tailwind, leading to a high double-digit earnings growth of 76%. Investors may find it useful to understand how market analysts view Schaeffler India’s earnings growth outlook over the next few years and whether the future looks even brighter than the past. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.

View our latest analysis for Schaeffler India

Analysts’ expectations for the coming year seems buoyant, with earnings growing by a robust 28%. This growth seems to continue into the following year with rates arriving at double digit 51% compared to today’s earnings, and finally hitting ₹7.6b by 2022.

NSEI:SCHAEFFLER Past and Future Earnings, April 1st 2019
NSEI:SCHAEFFLER Past and Future Earnings, April 1st 2019

While it’s informative understanding the growth each year relative to today’s level, it may be more insightful to determine the rate at which the business is rising or falling every year, on average. The benefit of this technique is that it removes the impact of near term flucuations and accounts for the overarching direction of Schaeffler India’s earnings trajectory over time, which may be more relevant for long term investors. To calculate this rate, I’ve inserted a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 18%. This means, we can expect Schaeffler India will grow its earnings by 18% every year for the next couple of years.

Next Steps:

For Schaeffler India, there are three relevant factors you should further research:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is SCHAEFFLER worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether SCHAEFFLER is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of SCHAEFFLER? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.