Bajaj Electricals Limited Just Missed Earnings - But Analysts Have Updated Their Models

Bajaj Electricals Limited (NSE:BAJAJELEC) missed earnings with its latest yearly results, disappointing overly-optimistic forecasters. It wasn't a great result overall - while revenue fell marginally short of analyst estimates at ₹48b, statutory earnings missed forecasts by 19%, coming in at just ₹10.81 per share. 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 Bajaj Electricals

Following the latest results, Bajaj Electricals' five analysts are now forecasting revenues of ₹55.4b in 2023. This would be a notable 15% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to surge 80% to ₹20.10. Before this earnings report, the analysts had been forecasting revenues of ₹56.2b and earnings per share (EPS) of ₹25.07 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a real cut to EPS estimates.

It might be a surprise to learn that the consensus price target fell 7.9% to ₹1,217, with the analysts clearly linking lower forecast earnings to the performance of the stock price. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Bajaj Electricals, with the most bullish analyst valuing it at ₹1,487 and the most bearish at ₹1,018 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.

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. For example, we noticed that Bajaj Electricals' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 15% growth to the end of 2023 on an annualised basis. That is well above its historical decline of 2.5% a year 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 22% annually for the foreseeable future. Although Bajaj Electricals' revenues are expected to improve, it seems that the analysts are still bearish on the business, forecasting it to grow slower than the broader 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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Bajaj Electricals' revenues are expected to perform worse than 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.

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 forecasts for Bajaj Electricals going out to 2025, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 3 warning signs for Bajaj Electricals that 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.