PI Industries Limited (NSE:PIIND) shares fell 3.1% to ₹1,550 in the week since its latest third-quarter results. Results look mixed – while revenue fell marginally short of analyst estimates at ₹8.5b, statutory earnings were in line with expectations, at ₹29.73 per share. 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. With this in mind, we’ve gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following the latest results, PI Industries’s eleven analysts are now forecasting revenues of ₹44.1b in 2021. This would be a sizeable 33% improvement in sales compared to the last 12 months. Statutory earnings per share are expected to soar 34% to ₹45.75. Yet prior to the latest earnings, analysts had been forecasting revenues of ₹43.0b and earnings per share (EPS) of ₹46.01 in 2021. So it looks like there’s been no major change in sentiment following the latest results, although analysts have made a slight bump in to revenue forecasts.
The consensus price target increased 11% to ₹1,573, with an improved revenue forecast carrying the promise of a more valuable business, in time. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic PI Industries analyst has a price target of ₹1,920 per share, while the most pessimistic values it at ₹970. 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.
Another way to assess these estimates is by comparing them to past performance, and seeing whether analysts are more or less bullish relative to other companies in the market. It’s clear from the latest estimates that PI Industries’s rate of growth is expected to accelerate meaningfully, with forecast 33% revenue growth noticeably faster than its historical growth of 11%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 13% per year. It seems obvious that, while the growth outlook is brighter than the recent past, analysts also expect PI Industries to grow faster than the wider market.
The Bottom Line
The most important thing to take away is that there’s been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Pleasantly, analysts also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates – from multiple PI Industries analysts – going out to 2022, and you can see them free on our platform here.
Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.
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