Earnings Miss: The New India Assurance Company Limited Missed EPS By 32% And Analysts Are Revising Their Forecasts

As you might know, The New India Assurance Company Limited (NSE:NIACL) recently reported its annual numbers. Sales of ₹328b surpassed estimates by 2.1%, although statutory earnings per share missed badly, coming in 32% below expectations at ₹9.95 per share. Following the result, the analyst has 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. With this in mind, we've gathered the latest statutory forecasts to see what the analyst is expecting for next year.

View our latest analysis for New India Assurance

Taking into account the latest results, the consensus forecast from New India Assurance's lone analyst is for revenues of ₹359.7b in 2022, which would reflect a meaningful 9.8% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to leap 53% to ₹14.19. Yet prior to the latest earnings, the analyst had been anticipated revenues of ₹369.1b and earnings per share (EPS) of ₹15.53 in 2022. The analyst are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The analyst made no major changes to their price target of ₹143, suggesting the downgrades are not expected to have a long-term impact on New India Assurance's valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We can infer from the latest estimates that forecasts expect a continuation of New India Assurance'shistorical trends, as the 9.8% annualised revenue growth to the end of 2022 is roughly in line with the 9.2% annual revenue growth over the past five years. Compare this with the broader industry (in aggregate), which analyst estimates suggest will see revenues fall 2.9% per year. So not only is New India Assurance expected to maintain its revenue growth despite the wider downturn, it's also forecast to grow faster than the industry as a whole.

The Bottom Line

The biggest concern is that the analyst reduced their earnings per share estimates, suggesting business headwinds could lay ahead for New India Assurance. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.

You can also see our analysis of New India Assurance's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

When trading New India Assurance or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on 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.