Rossari Biotech Limited Just Beat Revenue Estimates By 6.8%

Shareholders might have noticed that Rossari Biotech Limited (NSE:ROSSARI) filed its third-quarter result this time last week. The early response was not positive, with shares down 8.4% to ₹1,053 in the past week. Results overall were respectable, with statutory earnings of ₹15.47 per share roughly in line with what the analysts had forecast. Revenues of ₹4.3b came in 6.8% ahead of analyst predictions. The 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 the analysts are expecting for next year.

See our latest analysis for Rossari Biotech

Taking into account the latest results, the current consensus from Rossari Biotech's twin analysts is for revenues of ₹18.9b in 2023, which would reflect a substantial 50% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 71% to ₹29.73. In the lead-up to this report, the analysts had been modelling revenues of ₹16.8b and earnings per share (EPS) of ₹29.09 in 2023. Sentiment certainly seems to have improved after the latest results, with a nice gain to revenue and a slight bump in earnings per share estimates.

Despite these upgrades, the consensus price target fell 14% to ₹1,252, perhaps signalling that the uplift in performance is not expected to last.

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 Rossari Biotech's growth to accelerate, with the forecast 38% annualised growth to the end of 2023 ranking favourably alongside historical growth of 26% 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 14% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Rossari Biotech 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 Rossari Biotech's earnings potential next year. Happily, they also upgraded their revenue estimates, and are forecasting revenues to grow faster than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have analyst estimates for Rossari Biotech going out as far as 2024, and you can see them free on our platform here.

We don't want to rain on the parade too much, but we did also find 3 warning signs for Rossari Biotech that you need to be mindful of.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.