Earnings Update: Here's Why Analysts Just Lifted Their Gravita India Limited (NSE:GRAVITA) Price Target To ₹2,669

It's been a mediocre week for Gravita India Limited (NSE:GRAVITA) shareholders, with the stock dropping 13% to ₹2,139 in the week since its latest second-quarter results. The result was positive overall - although revenues of ₹9.3b were in line with what the analysts predicted, Gravita India surprised by delivering a statutory profit of ₹10.66 per share, modestly greater than expected. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Gravita India

Taking into account the latest results, the consensus forecast from Gravita India's six analysts is for revenues of ₹39.4b in 2025. This reflects a meaningful 14% improvement in revenue compared to the last 12 months. Per-share earnings are expected to grow 15% to ₹45.26. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹40.7b and earnings per share (EPS) of ₹46.78 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The average price target climbed 14% to ₹2,669despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Gravita India analyst has a price target of ₹3,475 per share, while the most pessimistic values it at ₹641. As you can see the range of estimates is wide, with the lowest valuation coming in at less than half the most bullish estimate, suggesting there are some strongly diverging views on how analysts think this business will perform. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Gravita India's past performance and to peers in the same industry. It's clear from the latest estimates that Gravita India's rate of growth is expected to accelerate meaningfully, with the forecast 30% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 23% 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 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Gravita India to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded Gravita India's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Gravita India. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Gravita India going out to 2027, and you can see them free on our platform here..

You still need to take note of risks, for example - Gravita India has 3 warning signs (and 2 which shouldn't be ignored) we think you should know about.

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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.