Sterling and Wilson Renewable Energy Limited (NSE:SWSOLAR) Second-Quarter Results: Here's What Analysts Are Forecasting For This Year

It's been a good week for Sterling and Wilson Renewable Energy Limited (NSE:SWSOLAR) shareholders, because the company has just released its latest second-quarter results, and the shares gained 9.5% to ₹622. It was a weak result overall, with Sterling and Wilson Renewable Energy reporting ₹10b in revenues, which was 21% less than what the analysts had expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Sterling and Wilson Renewable Energy

After the latest results, the three analysts covering Sterling and Wilson Renewable Energy are now predicting revenues of ₹78.3b in 2025. If met, this would reflect a huge 111% improvement in revenue compared to the last 12 months. Sterling and Wilson Renewable Energy is also expected to turn profitable, with statutory earnings of ₹17.73 per share. Before this earnings report, the analysts had been forecasting revenues of ₹81.1b and earnings per share (EPS) of ₹19.03 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

Despite the cuts to forecast earnings, there was no real change to the ₹822 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Sterling and Wilson Renewable Energy analyst has a price target of ₹870 per share, while the most pessimistic values it at ₹765. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Sterling and Wilson Renewable Energy is an easy business to forecast or the the analysts are all using similar assumptions.

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. One thing stands out from these estimates, which is that Sterling and Wilson Renewable Energy is forecast to grow faster in the future than it has in the past, with revenues expected to display 3x annualised growth until the end of 2025. If achieved, this would be a much better result than the 19% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. Not only are Sterling and Wilson Renewable Energy's revenues expected to improve, it seems that the analysts are also expecting it 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. They also downgraded Sterling and Wilson Renewable Energy's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

With that in mind, we wouldn't be too quick to come to a conclusion on Sterling and Wilson Renewable Energy. Long-term earnings power is much more important than next year's profits. We have forecasts for Sterling and Wilson Renewable Energy going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Sterling and Wilson Renewable Energy has 2 warning signs we think you should be aware of.

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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.