Stock Analysis

Need To Know: Analysts Are Much More Bullish On Rossari Biotech Limited (NSE:ROSSARI) Revenues

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Rossari Biotech Limited (NSE:ROSSARI) shareholders will have a reason to smile today, with the analysts making substantial upgrades to next year's statutory forecasts. The revenue forecast for next year has experienced a facelift, with analysts now much more optimistic on its sales pipeline.

Following the upgrade, the most recent consensus for Rossari Biotech from its twin analysts is for revenues of ₹19b in 2023 which, if met, would be a substantial 50% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 71% to ₹29.73. Before this latest update, the analysts had been forecasting revenues of ₹17b and earnings per share (EPS) of ₹29.09 in 2023. The forecasts seem more optimistic now, with a nice increase in revenue and a modest lift to earnings per share estimates.

View our latest analysis for Rossari Biotech

NSEI:ROSSARI Earnings and Revenue Growth February 20th 2022

Despite these upgrades, the consensus price target fell 14% to ₹1,252, perhaps signalling that the uplift in performance is not expected to last. 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. Currently, the most bullish analyst values Rossari Biotech at ₹1,455 per share, while the most bearish prices it at ₹1,046. 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 Rossari Biotech shareholders.

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 Rossari Biotech's rate of growth is expected to accelerate meaningfully, with the forecast 38% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 26% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Rossari Biotech to grow faster than the wider industry.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. They also upgraded their revenue estimates for next year, and sales are expected to grow faster than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Given that analysts appear to be expecting substantial improvement in the sales pipeline, now could be the right time to take another look at Rossari Biotech.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Rossari Biotech going out as far as 2024, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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Find out whether Rossari Biotech is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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