Analysts Have Lowered Expectations For One97 Communications Limited (NSE:PAYTM) After Its Latest Results

As you might know, One97 Communications Limited (NSE:PAYTM) last week released its latest full-year, and things did not turn out so great for shareholders. It was a pretty negative result overall, with revenues of ₹100b missing analyst predictions by 3.3%. Worse, the business reported a statutory loss of ₹23.00 per share, much larger than the analysts had forecast prior to the result. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for One97 Communications

Following the recent earnings report, the consensus from 14 analysts covering One97 Communications is for revenues of ₹88.2b in 2025. This implies a not inconsiderable 12% decline in revenue compared to the last 12 months. Losses are forecast to balloon 33% to ₹29.70 per share. Before this earnings announcement, the analysts had been modelling revenues of ₹115.0b and losses of ₹3.51 per share in 2025. There's been a definite change in sentiment in this update, with the analysts administering a notable cut to next year's revenue estimates, while at the same time increasing their loss per share forecasts.

The average price target fell 16% to ₹488, implicitly signalling that lower earnings per share are a leading indicator for One97 Communications' valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic One97 Communications analyst has a price target of ₹1,226 per share, while the most pessimistic values it at ₹275. So we wouldn't be assigning too much credibility to analyst price targets in this case, because there are clearly some widely different views on what kind of performance this business can generate. As a result it might not be a great idea to make decisions based on the consensus price target, which is after all just an average of this wide range of estimates.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 12% by the end of 2025. This indicates a significant reduction from annual growth of 28% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 11% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - One97 Communications is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that the analysts increased their loss per share estimates for next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will 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. At Simply Wall St, we have a full range of analyst estimates for One97 Communications going out to 2027, and you can see them free on our platform here..

You can also see our analysis of One97 Communications' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.