Tata Steel Limited Just Missed Earnings - But Analysts Have Updated Their Models
Investors in Tata Steel Limited (NSE:TATASTEEL) had a good week, as its shares rose 3.8% to close at ₹190 following the release of its first-quarter results. It was a pretty mixed result, with revenues beating expectations to hit ₹608b. Statutory earnings fell 6.5% short of analyst forecasts, reaching ₹1.86 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Tata Steel after the latest results.
Taking into account the latest results, the current consensus from Tata Steel's 36 analysts is for revenues of ₹2.62t in 2027. This would reflect a solid 9.1% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 64% to ₹14.46. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹2.60t and earnings per share (EPS) of ₹14.90 in 2027. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
See our latest analysis for Tata Steel
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹223, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on 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 Tata Steel at ₹275 per share, while the most bearish prices it at ₹170. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Tata Steel's rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 0.08% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 11% annually. Tata Steel is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Tata Steel. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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 estimates - from multiple Tata Steel analysts - 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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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.