Intellect Design Arena Limited Just Missed Earnings - But Analysts Have Updated Their Models

It's been a mediocre week for Intellect Design Arena Limited (NSE:INTELLECT) shareholders, with the stock dropping 17% to ₹875 in the week since its latest yearly results. Revenues of ₹26b were in line with forecasts, although statutory earnings per share (EPS) came in below expectations at ₹22.85, missing estimates by 7.1%. 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 thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Intellect Design Arena

Taking into account the latest results, the most recent consensus for Intellect Design Arena from four analysts is for revenues of ₹26.5b in 2025. If met, it would imply a reasonable 3.3% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to jump 32% to ₹30.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹27.1b and earnings per share (EPS) of ₹32.63 in 2025. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a small dip in earnings per share estimates.

The analysts made no major changes to their price target of ₹1,003, suggesting the downgrades are not expected to have a long-term impact on Intellect Design Arena's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Intellect Design Arena at ₹1,080 per share, while the most bearish prices it at ₹830. 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.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Intellect Design Arena's past performance and to peers in the same industry. We would highlight that Intellect Design Arena's revenue growth is expected to slow, with the forecast 3.3% annualised growth rate until the end of 2025 being well below the historical 14% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 14% per year. Factoring in the forecast slowdown in growth, it seems obvious that Intellect Design Arena is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Intellect Design Arena. 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. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Intellect Design Arena. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple Intellect Design Arena analysts - going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Intellect Design Arena has 2 warning signs we think 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.