Saregama India Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Saregama India Limited (NSE:SAREGAMA) shareholders are probably feeling a little disappointed, since its shares fell 6.5% to ₹331 in the week after its latest quarterly results. Saregama India missed revenue estimates by 8.4%, with sales of ₹1.9b, although statutory earnings per share (EPS) of ₹2.71 beat expectations, coming in 5.9% ahead of analyst estimates. 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Saregama India

After the latest results, the three analysts covering Saregama India are now predicting revenues of ₹8.98b in 2024. If met, this would reflect a sizeable 24% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to ascend 17% to ₹11.44. In the lead-up to this report, the analysts had been modelling revenues of ₹9.09b and earnings per share (EPS) of ₹11.27 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

It will come as no surprise then, to learn that the consensus price target is largely unchanged at ₹455. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Saregama India analyst has a price target of ₹460 per share, while the most pessimistic values it at ₹450. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Saregama India's growth to accelerate, with the forecast 19% annualised growth to the end of 2024 ranking favourably alongside historical growth of 8.1% 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 11% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Saregama India is expected to grow much faster than its industry.

The Bottom Line

The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Happily, there were no major changes to revenue forecasts, with the business still 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 forecasts for Saregama India going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Saregama India has 2 warning signs (and 1 which shouldn't be ignored) 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.