S.P. Apparels Limited (NSE:SPAL) Analysts Are Pretty Bullish On The Stock After Recent Results

Shareholders will be ecstatic, with their stake up 35% over the past week following S.P. Apparels Limited's (NSE:SPAL) latest quarterly results. Results were roughly in line with estimates, with revenues of ₹2.1b and statutory earnings per share of ₹18.26. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for S.P. Apparels

Taking into account the latest results, the most recent consensus for S.P. Apparels from two analysts is for revenues of ₹8.13b in 2022 which, if met, would be a huge 34% increase on its sales over the past 12 months. Per-share earnings are expected to shoot up 84% to ₹25.40. In the lead-up to this report, the analysts had been modelling revenues of ₹8.13b and earnings per share (EPS) of ₹25.40 in 2022. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 8.9% to ₹234despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of S.P. Apparels' earnings by assigning a price premium.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that S.P. Apparels' rate of growth is expected to accelerate meaningfully, with the forecast 34% revenue growth noticeably faster than its historical growth of 5.7%p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 23% next year. 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 most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are 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.

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. We have analyst estimates for S.P. Apparels going out as far as 2023, and you can see them free on our platform here.

Even so, be aware that S.P. Apparels is showing 2 warning signs in our investment analysis , you should know about...

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