Adani Transmissions Limited (BOM:539254): Earnings Growth Remains Elusive

Adani Transmissions Limited's (BOM:539254) announced its latest earnings update in March 2018, which indicated that the business experienced a significant tailwind, more than doubling its earnings from the prior year. Investors may find it useful to understand how market analysts perceive Adani Transmissions's earnings growth outlook over the next couple of years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings. Check out our latest analysis for Adani Transmissions

Market analysts' prospects for next year seems pessimistic, with earnings declining by a double-digit -39.68%. Beyond this, earnings are predicted to continue to be below today's level, with a decline of -26.25% in 2020, eventually reaching ₹8.43b in 2021.

Although it is informative understanding the rate of growth year by year relative to today’s figure, it may be more insightful to analyze the rate at which the company is rising or falling on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of Adani Transmissions's earnings trajectory over time, fluctuate up and down. To compute this rate, I put a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is -12.25%. This means, we can assume Adani Transmissions will chip away at a rate of -12.25% every year for the next couple of years.

Next Steps:

For Adani Transmissions, I've compiled three pertinent factors you should further research:

1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
2. Valuation: What is 539254 worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether 539254 is currently mispriced by the market.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of 539254? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

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Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.