RITES Limited Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

RITES Limited (NSE:RITES) shareholders are probably feeling a little disappointed, since its shares fell 2.3% to ₹258 in the week after its latest third-quarter results. Revenues were ₹5.8b, 14% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of ₹9.48 being in line with what the analysts forecast. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for RITES

After the latest results, the dual analysts covering RITES are now predicting revenues of ₹27.2b in 2026. If met, this would reflect a huge 21% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to climb 14% to ₹9.00. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹30.5b and earnings per share (EPS) of ₹11.80 in 2026. It looks like sentiment has declined substantially in the aftermath of these results, with a real cut to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

The consensus price target fell 19% to ₹266, with the weaker earnings outlook clearly leading valuation estimates.

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. The analysts are definitely expecting RITES' growth to accelerate, with the forecast 16% annualised growth to the end of 2026 ranking favourably alongside historical growth of 2.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 15% annually. RITES is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.

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 their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At least one analyst has provided forecasts out to 2027, which can be seen for free on our platform here.

It is also worth noting that we have found 1 warning sign for RITES that you need to take into consideration.

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.