Earnings Update: Here's Why Analysts Just Lifted Their Arvind Fashions Limited (NSE:ARVINDFASN) Price Target To ₹572

Shareholders might have noticed that Arvind Fashions Limited (NSE:ARVINDFASN) filed its third-quarter result this time last week. The early response was not positive, with shares down 8.6% to ₹461 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at ₹11b, statutory earnings were in line with expectations, at ₹2.83 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Arvind Fashions after the latest results.

See our latest analysis for Arvind Fashions

After the latest results, the five analysts covering Arvind Fashions are now predicting revenues of ₹48.9b in 2025. If met, this would reflect a modest 7.4% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to leap 650% to ₹10.38. In the lead-up to this report, the analysts had been modelling revenues of ₹51.9b and earnings per share (EPS) of ₹10.25 in 2025. The consensus seems maybe a little more pessimistic, trimming their revenue forecasts after the latest results even though there was no change to its EPS estimates.

The consensus price target rose 10% to ₹572, with the analysts apparently satisfied with the business performance despite lower revenue forecasts. 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 Arvind Fashions, with the most bullish analyst valuing it at ₹633 and the most bearish at ₹485 per share. 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.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Arvind Fashions' rate of growth is expected to accelerate meaningfully, with the forecast 5.9% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 1.3% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 22% annually. So it's clear that despite the acceleration in growth, Arvind Fashions is expected to grow meaningfully slower than the industry average.

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. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Even so, long term profitability is more important for the value creation process. 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. We have forecasts for Arvind Fashions going out to 2026, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for Arvind Fashions (1 doesn't sit too well with us!) that you should be aware 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.