Go Fashion (India) Limited (NSE:GOCOLORS) Released Earnings Last Week And Analysts Lifted Their Price Target To ₹1,602

Go Fashion (India) Limited (NSE:GOCOLORS) shareholders are probably feeling a little disappointed, since its shares fell 4.8% to ₹1,330 in the week after its latest quarterly results. Revenues came in 2.4% below expectations, at ₹1.7b. Statutory earnings per share were relatively better off, with a per-share profit of ₹6.74 being roughly in line with analyst estimates. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Go Fashion (India) after the latest results.

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Following the latest results, Go Fashion (India)'s three analysts are now forecasting revenues of ₹6.73b in 2023. This would be a solid 14% improvement in sales compared to the last 12 months. Per-share earnings are expected to swell 20% to ₹17.67. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹6.89b and earnings per share (EPS) of ₹18.50 in 2023. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

The average price target climbed 15% to ₹1,602despite 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. There are some variant perceptions on Go Fashion (India), with the most bullish analyst valuing it at ₹1,619 and the most bearish at ₹1,587 per share. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Go Fashion (India)'s past performance and to peers in the same industry. It's pretty clear that there is an expectation that Go Fashion (India)'s revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 31% growth on an annualised basis. This is compared to a historical growth rate of 82% over the past year. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 20% annually. So it's pretty clear that, while Go Fashion (India)'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 Go Fashion (India)'s revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Go Fashion (India) going out to 2025, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.