Analysts' Revenue Estimates For Aditya Birla Capital Limited (NSE:ABCAPITAL) Are Surging Higher

Celebrations may be in order for Aditya Birla Capital Limited (NSE:ABCAPITAL) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. The analysts have sharply increased their revenue numbers, with a view that Aditya Birla Capital will make substantially more sales than they'd previously expected. The market seems to be pricing in some improvement in the business too, with the stock up 5.8% over the past week, closing at ₹127. Could this big upgrade push the stock even higher?

After the upgrade, the seven analysts covering Aditya Birla Capital are now predicting revenues of ₹222b in 2022. If met, this would reflect a sizeable 45% improvement in sales compared to the last 12 months. Per-share earnings are expected to bounce 47% to ₹6.85. Before this latest update, the analysts had been forecasting revenues of ₹202b and earnings per share (EPS) of ₹6.68 in 2022. The most recent forecasts are noticeably more optimistic, with a nice gain to revenue estimates and a lift to earnings per share as well.

See our latest analysis for Aditya Birla Capital

Despite these upgrades, the analysts have not made any major changes to their price target of ₹145, suggesting that the higher estimates are not likely to have a long term impact on what the stock is worth. 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 Aditya Birla Capital, with the most bullish analyst valuing it at ₹173 and the most bearish at ₹115 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Aditya Birla Capital shareholders.

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. It's clear from the latest estimates that Aditya Birla Capital's rate of growth is expected to accelerate meaningfully, with the forecast 45% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 24% p.a. 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 Aditya Birla Capital is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for this year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Aditya Birla Capital.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Aditya Birla Capital analysts - going out to 2024, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

If you’re looking to trade Aditya Birla Capital, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

This article by Simply Wall St is general in nature. 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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.