Intellect Design Arena Limited (NSE:INTELLECT) Just Reported And Analysts Have Been Lifting Their Price Targets

Last week, you might have seen that Intellect Design Arena Limited (NSE:INTELLECT) released its third-quarter result to the market. The early response was not positive, with shares down 6.3% to ₹881 in the past week. Results were roughly in line with estimates, with revenues of ₹6.3b and statutory earnings per share of ₹6.00. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

Check out our latest analysis for Intellect Design Arena

Taking into account the latest results, the current consensus from Intellect Design Arena's four analysts is for revenues of ₹27.8b in 2025. This would reflect a decent 11% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to leap 33% to ₹32.90. Before this earnings report, the analysts had been forecasting revenues of ₹28.8b and earnings per share (EPS) of ₹32.70 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 analysts have also increased their price target 17% to ₹953, clearly signalling that lower revenue forecasts next year are not expected to have a material impact on Intellect Design Arena's valuation. 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 Intellect Design Arena, with the most bullish analyst valuing it at ₹1,050 and the most bearish at ₹830 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's pretty clear that there is an expectation that Intellect Design Arena's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 8.6% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 15% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Intellect Design Arena.

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, earnings are more important to the intrinsic value of the business. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

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 Intellect Design Arena going out to 2026, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 2 warning signs for Intellect Design Arena 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.