Gujarat State Fertilizers & Chemicals Limited (NSE:GSFC) shareholders are probably feeling a little disappointed, since its shares fell 4.2% to ₹113 in the week after its latest yearly results. Revenues of ₹76b fell slightly short of expectations, but earnings were a definite bright spot, with statutory per-share profits of ₹11.30 an impressive 23% ahead of estimates. 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. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following the latest results, Gujarat State Fertilizers & Chemicals’ two analysts are now forecasting revenues of ₹102.6b in 2022. This would be a huge 34% improvement in sales compared to the last 12 months. Per-share earnings are expected to rise 4.4% to ₹11.80. Before this earnings report, the analysts had been forecasting revenues of ₹86.5b and earnings per share (EPS) of ₹9.85 in 2022. There has definitely been an improvement in perception after these results, with the analysts noticeably increasing both their earnings and revenue estimates.
With these upgrades, we’re not surprised to see that the analysts have lifted their price target 29% to ₹113per share.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Gujarat State Fertilizers & Chemicals’ growth to accelerate, with the forecast 34% annualised growth to the end of 2022 ranking favourably alongside historical growth of 6.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 14% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Gujarat State Fertilizers & Chemicals to grow faster than the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Gujarat State Fertilizers & Chemicals’ earnings potential next year. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At least one analyst has provided forecasts out to 2023, which can be seen for free on our platform here.
You should always think about risks though. Case in point, we’ve spotted 2 warning signs for Gujarat State Fertilizers & Chemicals you should be aware of.
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