Piramal Enterprises Limited Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

Shareholders of Piramal Enterprises Limited (NSE:PEL) will be pleased this week, given that the stock price is up 13% to ₹2,814 following its latest quarterly results. Revenues were ₹29b, 12% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of ₹55.68 being in line with what the analysts forecast. 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. 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 Piramal Enterprises

Taking into account the latest results, the most recent consensus for Piramal Enterprises from four analysts is for revenues of ₹134.0b in 2022 which, if met, would be a modest 3.2% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 92% to ₹111. In the lead-up to this report, the analysts had been modelling revenues of ₹135.2b and earnings per share (EPS) of ₹110 in 2022. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

With the analysts reconfirming their revenue and earnings forecasts, it's surprising to see that the price target rose 19% to ₹2,787. It looks as though they previously had some doubts over whether the business would live up to their expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Piramal Enterprises, with the most bullish analyst valuing it at ₹3,099 and the most bearish at ₹2,150 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 Piramal Enterprises 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 pretty clear that there is an expectation that Piramal Enterprises' revenue growth will slow down substantially, with revenues to the end of 2022 expected to display 4.3% growth on an annualised basis. This is compared to a historical growth rate of 12% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 8.8% 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 Piramal Enterprises.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Piramal Enterprises' revenues are expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

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 estimates - from multiple Piramal Enterprises analysts - going out to 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 5 warning signs for Piramal Enterprises (1 makes us a bit uncomfortable!) that you need to be mindful of.

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