Analysts Have Lowered Expectations For Aditya Birla Sun Life AMC Limited (NSE:ABSLAMC) After Its Latest Results

Last week saw the newest quarterly earnings release from Aditya Birla Sun Life AMC Limited (NSE:ABSLAMC), an important milestone in the company's journey to build a stronger business. Aditya Birla Sun Life AMC reported in line with analyst predictions, delivering revenues of ₹3.0b and statutory earnings per share of ₹23.29, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Aditya Birla Sun Life AMC after the latest results.

View our latest analysis for Aditya Birla Sun Life AMC

Following last week's earnings report, Aditya Birla Sun Life AMC's five analysts are forecasting 2023 revenues to be ₹13.5b, approximately in line with the last 12 months. Statutory earnings per share are forecast to decrease 3.9% to ₹20.70 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹14.3b and earnings per share (EPS) of ₹24.55 in 2023. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a substantial drop in earnings per share numbers.

The analysts made no major changes to their price target of ₹558, suggesting the downgrades are not expected to have a long-term impact on Aditya Birla Sun Life AMC's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Aditya Birla Sun Life AMC, with the most bullish analyst valuing it at ₹650 and the most bearish at ₹465 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 Sun Life AMC shareholders.

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. We would highlight that Aditya Birla Sun Life AMC's revenue growth is expected to slow, with the forecast 0.5% annualised growth rate until the end of 2023 being well below the historical 6.3% growth over the last year. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 12% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Aditya Birla Sun Life AMC.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Aditya Birla Sun Life AMC. Unfortunately, they also downgraded their revenue estimates, and our data indicates revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at ₹558, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Aditya Birla Sun Life AMC. Long-term earnings power is much more important than next year's profits. We have forecasts for Aditya Birla Sun Life AMC going out to 2025, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Aditya Birla Sun Life AMC that we have uncovered.

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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.