eClerx Services Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

A week ago, eClerx Services Limited (NSE:ECLERX) came out with a strong set of second-quarter numbers that could potentially lead to a re-rate of the stock. Results were good overall, with revenues beating analyst predictions by 2.3% to hit ₹8.3b. Statutory earnings per share (EPS) came in at ₹29.15, some 7.4% above whatthe analysts had expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for eClerx Services

Taking into account the latest results, the current consensus from eClerx Services' eight analysts is for revenues of ₹33.5b in 2025. This would reflect an okay 6.4% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 4.7% to ₹113. In the lead-up to this report, the analysts had been modelling revenues of ₹32.7b and earnings per share (EPS) of ₹109 in 2025. So there seems to have been a moderate uplift in sentiment following the latest results, given the upgrades to both revenue and earnings per share forecasts for next year.

With these upgrades, we're not surprised to see that the analysts have lifted their price target 11% to ₹2,939per share. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on eClerx Services, with the most bullish analyst valuing it at ₹3,700 and the most bearish at ₹2,150 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

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 pretty clear that there is an expectation that eClerx Services' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 18% over the past five years. Compare this to the 62 other companies in this industry with analyst coverage, which are forecast to grow their revenue at 15% per year. Factoring in the forecast slowdown in growth, it looks like eClerx Services is forecast to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around eClerx Services' earnings potential next year. They also upgraded their revenue forecasts, although the latest estimates suggest that eClerx Services will grow in line with the overall 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple eClerx Services analysts - going out to 2027, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.