Indigo Paints Limited (NSE:INDIGOPNTS) Third-Quarter Results: Here's What Analysts Are Forecasting For Next Year

Last week, you might have seen that Indigo Paints Limited (NSE:INDIGOPNTS) released its quarterly result to the market. The early response was not positive, with shares down 2.5% to ₹1,893 in the past week. Results were roughly in line with estimates, with revenues of ₹2.7b and statutory earnings per share of ₹15.54. 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 gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

View our latest analysis for Indigo Paints

Taking into account the latest results, the current consensus from Indigo Paints' six analysts is for revenues of ₹12.5b in 2023, which would reflect a major 44% increase on its sales over the past 12 months. Statutory earnings per share are predicted to jump 98% to ₹31.00. Before this earnings report, the analysts had been forecasting revenues of ₹12.5b and earnings per share (EPS) of ₹34.90 in 2023. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.

The consensus price target held steady at ₹2,359, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. 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 Indigo Paints at ₹2,837 per share, while the most bearish prices it at ₹2,113. 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.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's clear from the latest estimates that Indigo Paints' rate of growth is expected to accelerate meaningfully, with the forecast 34% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 18% 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 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Indigo Paints is expected to grow much faster than its industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Indigo Paints. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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. We have estimates - from multiple Indigo Paints analysts - going out to 2024, and you can see them free on our platform here.

Don't forget that there may still be risks. For instance, we've identified 1 warning sign for Indigo Paints that you should be aware of.

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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.