S.P. Apparels Limited Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

Last week, you might have seen that S.P. Apparels Limited (NSE:SPAL) released its first-quarter result to the market. The early response was not positive, with shares down 9.0% to ₹899 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at ₹2.5b, statutory earnings were in line with expectations, at ₹35.72 per share. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. 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 S.P. Apparels

Taking into account the latest results, the most recent consensus for S.P. Apparels from three analysts is for revenues of ₹13.3b in 2025. If met, it would imply a major 22% increase on its revenue over the past 12 months. Per-share earnings are expected to rise 3.9% to ₹38.40. Before this earnings report, the analysts had been forecasting revenues of ₹13.3b and earnings per share (EPS) of ₹39.70 in 2025. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

Despite cutting their earnings forecasts,the analysts have lifted their price target 28% to ₹878, suggesting that these impacts are not expected to weigh on the stock's value in the long term. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic S.P. Apparels analyst has a price target of ₹910 per share, while the most pessimistic values it at ₹845. This is a very narrow spread of estimates, implying either that S.P. Apparels is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting S.P. Apparels' growth to accelerate, with the forecast 31% annualised growth to the end of 2025 ranking favourably alongside historical growth of 9.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that S.P. Apparels is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for S.P. Apparels. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on S.P. Apparels. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for S.P. Apparels going out to 2027, and you can see them free on our platform here..

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for S.P. Apparels 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.