Power Grid Corporation of India Limited (NSE:POWERGRID) Second-Quarter Results: Here's What Analysts Are Forecasting For This Year

Last week, you might have seen that Power Grid Corporation of India Limited (NSE:POWERGRID) released its quarterly result to the market. The early response was not positive, with shares down 3.0% to ₹228 in the past week. Results were roughly in line with estimates, with revenues of ₹112b and statutory earnings per share of ₹24.12. 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 Power Grid Corporation of India after the latest results.

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Taking into account the latest results, Power Grid Corporation of India's ten analysts currently expect revenues in 2023 to be ₹433.4b, approximately in line with the last 12 months. Statutory per-share earnings are expected to be ₹21.22, roughly flat on the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹424.2b and earnings per share (EPS) of ₹20.60 in 2023. It looks like there's been a modest increase in sentiment following the latest results, withthe analysts becoming a bit more optimistic in their predictions for both revenues and earnings.

Althoughthe analysts have upgraded their earnings estimates, there was no change to the consensus price target of ₹244, suggesting that the forecast performance does not have a long term impact on the company's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Power Grid Corporation of India at ₹275 per share, while the most bearish prices it at ₹200. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Power Grid Corporation of India's revenue growth is expected to slow, with the forecast 0.7% annualised growth rate until the end of 2023 being well below the historical 5.4% p.a. growth over the last three years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 6.1% annually. Factoring in the forecast slowdown in growth, it seems obvious that Power Grid Corporation of India is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Power Grid Corporation of India following these results. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. 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.

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 Power Grid Corporation of India going out to 2025, and you can see them free on our platform here.

You still need to take note of risks, for example - Power Grid Corporation of India 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.