Stock Analysis

Rainbows and Unicorns: JSW Steel Limited (NSE:JSWSTEEL) Analysts Just Became A Lot More Optimistic

NSEI:JSWSTEEL
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JSW Steel Limited (NSE:JSWSTEEL) shareholders will have a reason to smile today, with the analysts making substantial upgrades to this year's statutory forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals.

After this upgrade, JSW Steel's 22 analysts are now forecasting revenues of ₹1.2t in 2022. This would be a huge 46% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to jump 142% to ₹79.72. Before this latest update, the analysts had been forecasting revenues of ₹1.0t and earnings per share (EPS) of ₹53.42 in 2022. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

See our latest analysis for JSW Steel

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NSEI:JSWSTEEL Earnings and Revenue Growth May 26th 2021

With these upgrades, we're not surprised to see that the analysts have lifted their price target 29% to ₹675 per share. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on JSW Steel, with the most bullish analyst valuing it at ₹920 and the most bearish at ₹300 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the JSW Steel's past performance and to peers in the same industry. The analysts are definitely expecting JSW Steel's growth to accelerate, with the forecast 46% annualised growth to the end of 2022 ranking favourably alongside historical growth of 9.8% per annum 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 9.2% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that JSW Steel is expected to grow much faster than its industry.

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. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, JSW Steel could be worth investigating further.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple JSW Steel analysts - going out to 2024, and you can see them free on our platform here.

We also provide an overview of the JSW Steel Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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