Bullish: Analysts Just Made An Incredible Upgrade To Their Jindal Stainless Limited (NSE:JSL) Forecasts

Celebrations may be in order for Jindal Stainless Limited (NSE:JSL) shareholders, with the analysts delivering a significant upgrade to their statutory estimates for the company. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The stock price has risen 9.3% to ₹159 over the past week, suggesting investors are becoming more optimistic. Could this big upgrade push the stock even higher?

Following the upgrade, the latest consensus from Jindal Stainless' four analysts is for revenues of ₹163b in 2022, which would reflect a meaningful 10% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 3.5% to ₹16.70 in the same period. Prior to this update, the analysts had been forecasting revenues of ₹148b and earnings per share (EPS) of ₹12.28 in 2022. There has definitely been an improvement in perception recently, with the analysts substantially increasing both their earnings and revenue estimates.

View our latest analysis for Jindal Stainless

Although the analysts have upgraded their earnings estimates, there was no change to the consensus price target of ₹149, suggesting that the forecast performance does not have a long term impact on the company's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic Jindal Stainless analyst has a price target of ₹191 per share, while the most pessimistic values it at ₹120. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Jindal Stainless shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Jindal Stainless' revenue growth is expected to slow, with the forecast 14% annualised growth rate until the end of 2022 being well below the historical 34% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 6.2% per year. So it's pretty clear that, while Jindal Stainless' revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. They also upgraded their revenue estimates for this year, and sales are expected to grow faster than the wider market. Some investors might be disappointed to see that the price target is unchanged, but we feel that improving fundamentals are usually a positive - assuming these forecasts are met! So Jindal Stainless could be a good candidate for more research.

Analysts are clearly in love with Jindal Stainless at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as a weak balance sheet. For more information, you can click through to our platform to learn more about this and the 2 other warning signs we've identified .

You can also see our analysis of Jindal Stainless' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.
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