How Do Analysts See Birla Corporation Limited (NSE:BIRLACORPN) Performing Over The Next Year?

After Birla Corporation Limited’s (NSE:BIRLACORPN) earnings announcement in December 2018, the consensus outlook from analysts appear somewhat bearish, with earnings expected to grow by 1.3% in the upcoming year compared with the higher past 5-year average growth rate of 7.4%. By 2020, we can expect Birla’s bottom line to reach ₹1.6b, a jump from the current trailing-twelve-month of ₹1.5b. Below is a brief commentary on the longer term outlook the market has for Birla. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Birla

Exciting times ahead?

Longer term expectations from the 5 analysts covering BIRLACORPN’s stock is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To get an idea of the overall earnings growth trend for BIRLACORPN, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NSEI:BIRLACORPN Past and Future Earnings, April 12th 2019
NSEI:BIRLACORPN Past and Future Earnings, April 12th 2019

From the current net income level of ₹1.5b and the final forecast of ₹1.6b by 2022, the annual rate of growth for BIRLACORPN’s earnings is 16%. This leads to an EPS of ₹35.07 in the final year of projections relative to the current EPS of ₹19.99. However, the expansion of the current 2.7% margin is not expected to be sustained, as it begins to contract to 2.2% by the end of 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Birla, I’ve put together three fundamental factors you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is Birla worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Birla is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Birla? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.