Earnings Beat: Devyani International Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Models
As you might know, Devyani International Limited (NSE:DEVYANI) recently reported its quarterly numbers. Revenues were ₹16b, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at ₹0.12, an impressive 33% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
After the latest results, the 20 analysts covering Devyani International are now predicting revenues of ₹63.6b in 2027. If met, this would reflect a notable 9.0% improvement in revenue compared to the last 12 months. Devyani International is also expected to turn profitable, with statutory earnings of ₹0.29 per share. Before this earnings report, the analysts had been forecasting revenues of ₹63.4b and earnings per share (EPS) of ₹0.44 in 2027. So there's definitely been a decline in sentiment after the latest results, noting the large cut to new EPS forecasts.
See our latest analysis for Devyani International
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹151, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Devyani International analyst has a price target of ₹186 per share, while the most pessimistic values it at ₹123. 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.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. We would highlight that Devyani International's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2027 being well below the historical 24% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 18% per year. Factoring in the forecast slowdown in growth, it seems obvious that Devyani International is also expected to grow slower than other industry participants.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Devyani International. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will 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.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Devyani International going out to 2029, and you can see them free on our platform here.
You still need to take note of risks, for example - Devyani International has 1 warning sign 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.