Earnings Report: Finolex Industries Limited Missed Revenue Estimates By 29%
As you might know, Finolex Industries Limited (NSE:FINPIPE) recently reported its first-quarter numbers. Finolex Industries reported a serious miss, with revenue of ₹8.8b falling a huge 29% short of analyst estimates. The bright side is that statutory earnings per share of ₹9.69 were in line with forecasts. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, Finolex Industries' ten analysts are now forecasting revenues of ₹42.7b in 2027. This would be an okay 7.7% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to sink 11% to ₹8.81 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹46.7b and earnings per share (EPS) of ₹9.77 in 2027. It's pretty clear that pessimism has reared its head after the latest results, leading to a weaker revenue outlook and a minor downgrade to earnings per share estimates.
View our latest analysis for Finolex Industries
The analysts made no major changes to their price target of ₹208, suggesting the downgrades are not expected to have a long-term impact on Finolex Industries' valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Finolex Industries at ₹271 per share, while the most bearish prices it at ₹180. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
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. One thing stands out from these estimates, which is that Finolex Industries is forecast to grow faster in the future than it has in the past, with revenues expected to display 10% annualised growth until the end of 2027. If achieved, this would be a much better result than the 2.3% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 12% annually. So it looks like Finolex Industries is expected to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Finolex Industries. They also downgraded their revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same 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.
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 estimates - from multiple Finolex Industries analysts - going out to 2029, and you can see them free on our platform here.
It is also worth noting that we have found 1 warning sign for Finolex Industries that you need to take into consideration.
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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.