Results: Tata Steel Limited Confounded Analyst Expectations With A Surprise Profit

As you might know, Tata Steel Limited (NSE:TATASTEEL) recently reported its third-quarter numbers. Although revenues of ₹536b were in line with analyst expectations, Tata Steel surprised on the earnings front, with an unexpected (statutory) profit of ₹0.26 per share a nice improvement on the losses that the analystsforecast. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Check out our latest analysis for Tata Steel

Following the latest results, Tata Steel's 29 analysts are now forecasting revenues of ₹2.46t in 2026. This would be a notable 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 380% to ₹10.49. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹2.48t and earnings per share (EPS) of ₹11.74 in 2026. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at ₹152, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. There are some variant perceptions on Tata Steel, with the most bullish analyst valuing it at ₹192 and the most bearish at ₹115 per share. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We can infer from the latest estimates that forecasts expect a continuation of Tata Steel'shistorical trends, as the 8.9% annualised revenue growth to the end of 2026 is roughly in line with the 11% annual growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 13% per year. So it's pretty clear that Tata Steel is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tata Steel. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at ₹152, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Tata Steel going out to 2027, and you can see them free on our platform here.

That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with Tata Steel , and understanding them should be part of your investment process.

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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.