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Tata Steel Limited Just Missed EPS By 11%: Here's What Analysts Think Will Happen Next
It's been a good week for Tata Steel Limited (NSE:TATASTEEL) shareholders, because the company has just released its latest half-yearly results, and the shares gained 4.2% to ₹185. It was not a great result overall. Although revenues beat expectations, hitting ₹1.3t, statutory earnings missed analyst forecasts by 11%, coming in at just ₹2.94 per share. 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Tata Steel's 34 analysts is for revenues of ₹2.64t in 2027. This reflects a satisfactory 7.0% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 51% to ₹14.07. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹2.62t and earnings per share (EPS) of ₹14.24 in 2027. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
Check out our latest analysis for Tata Steel
It will come as no surprise then, to learn that the consensus price target is largely unchanged at ₹217. 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. The most optimistic Tata Steel analyst has a price target of ₹260 per share, while the most pessimistic values it at ₹175. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. For example, we noticed that Tata Steel's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 14% growth to the end of 2027 on an annualised basis. That is well above its historical decline of 0.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 11% per year. Not only are Tata Steel's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.
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. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Tata Steel going out to 2029, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 2 warning signs for Tata Steel that you need to be mindful of.
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