Emami Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Emami Limited (NSE:EMAMILTD) just released its latest quarterly results and things are looking bullish. Results were good overall, with revenues beating analyst predictions by 2.3% to hit ₹9.3b. Statutory earnings per share (EPS) came in at ₹4.70, some 9.3% above whatthe analysts had expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Emami

Taking into account the latest results, the most recent consensus for Emami from 21 analysts is for revenues of ₹31.5b in 2022 which, if met, would be a notable 17% increase on its sales over the past 12 months. Statutory earnings per share are predicted to soar 34% to ₹11.63. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹30.8b and earnings per share (EPS) of ₹11.42 in 2022. There doesn't appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.

The analysts increased their price target 9.6% to ₹523, perhaps signalling that higher revenues are a strong leading indicator for Emami's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Emami at ₹631 per share, while the most bearish prices it at ₹402. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Emami's past performance and to peers in the same industry. It's clear from the latest estimates that Emami's rate of growth is expected to accelerate meaningfully, with the forecast 17% revenue growth noticeably faster than its historical growth of 0.9%p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 10.0% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Emami is expected to grow much faster than its industry.

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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Emami going out to 2023, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 2 warning signs for Emami that you should be aware of.

If you decide to trade Emami, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all 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.