Sobha Limited Just Missed Earnings - But Analysts Have Updated Their Models

As you might know, Sobha Limited (NSE:SOBHA) last week released its latest yearly, and things did not turn out so great for shareholders. Unfortunately, Sobha delivered a serious earnings miss. Revenues of ₹32b were 19% below expectations, and statutory earnings per share of ₹5.18 missed estimates by 79%. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for Sobha

Taking into account the latest results, the most recent consensus for Sobha from 13 analysts is for revenues of ₹46.3b in 2025. If met, it would imply a major 44% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 684% to ₹40.62. Before this earnings report, the analysts had been forecasting revenues of ₹47.5b and earnings per share (EPS) of ₹49.45 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The average price target climbed 17% to ₹1,609despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes. 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. The most optimistic Sobha analyst has a price target of ₹2,592 per share, while the most pessimistic values it at ₹724. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

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. For example, we noticed that Sobha's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 44% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 2.4% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 21% per year. So it looks like Sobha is expected to grow faster than its competitors, at least for a while.

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 Sobha's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Sobha going out to 2027, and you can see them free on our platform here..

You still need to take note of risks, for example - Sobha has 3 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.