Jindal Stainless Limited Just Missed Earnings And Its Revenue Numbers Were Weaker Than Expected

Investors in Jindal Stainless Limited (NSE:JSL) had a good week, as its shares rose 4.1% to close at ₹77.20 following the release of its quarterly results. Revenues came in 5.8% below expectations, at ₹36b. Statutory earnings per share were relatively better off, with a per-share profit of ₹1.48 being roughly in line with analyst estimates. 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 Jindal Stainless

After the latest results, the dual analysts covering Jindal Stainless are now predicting revenues of ₹145.0b in 2022. If met, this would reflect a major 28% improvement in sales compared to the last 12 months. Per-share earnings are expected to soar 466% to ₹7.55. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹145.1b and earnings per share (EPS) of ₹6.95 in 2022. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 16% to ₹104.

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. The analysts are definitely expecting Jindal Stainless' growth to accelerate, with the forecast 28% growth ranking favourably alongside historical growth of 7.6% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.8% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that Jindal Stainless is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Jindal Stainless' earnings potential next year. Happily, there were no major changes to revenue forecasts, with the business still 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.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have analyst estimates for Jindal Stainless going out as far as 2023, and you can see them free on our platform here.

Even so, be aware that Jindal Stainless is showing 3 warning signs in our investment analysis , and 1 of those makes us a bit uncomfortable...

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