Revenue Beat: Shyam Metalics and Energy Limited Exceeded Revenue Forecasts By 5.0% And Analysts Are Updating Their Estimates

Shyam Metalics and Energy Limited (NSE:SHYAMMETL) last week reported its latest quarterly results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. It was a workmanlike result, with revenues of ₹32b coming in 5.0% ahead of expectations, and statutory earnings per share of ₹68.91, in line with analyst appraisals. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

View our latest analysis for Shyam Metalics and Energy

Taking into account the latest results, the most recent consensus for Shyam Metalics and Energy from five analysts is for revenues of ₹120.4b in 2023 which, if met, would be a credible 8.0% increase on its sales over the past 12 months. Statutory earnings per share are forecast to tumble 20% to ₹52.45 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹125.4b and earnings per share (EPS) of ₹70.10 in 2023. The analysts seem less optimistic after the recent results, reducing their sales forecasts and making a large cut to earnings per share numbers.

Despite the cuts to forecast earnings, there was no real change to the ₹420 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on Shyam Metalics and Energy, with the most bullish analyst valuing it at ₹608 and the most bearish at ₹316 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Shyam Metalics and Energy's revenue growth is expected to slow, with the forecast 11% annualised growth rate until the end of 2023 being well below the historical 42% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 0.1% per year. So it's pretty clear that, while Shyam Metalics and Energy's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Shyam Metalics and Energy's revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

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 estimates - from multiple Shyam Metalics and Energy analysts - going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Shyam Metalics and Energy has 2 warning signs (and 1 which is concerning) we think you should know about.

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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.