Earnings Release: Here's Why Analysts Cut Their RHI Magnesita India Limited (NSE:RHIM) Price Target To ₹545
Last week, you might have seen that RHI Magnesita India Limited (NSE:RHIM) released its first-quarter result to the market. The early response was not positive, with shares down 4.7% to ₹392 in the past week. Revenues were ₹10b, with RHI Magnesita India reporting some 9.9% below analyst expectations. 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. 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, RHI Magnesita India's three analysts are now forecasting revenues of ₹44.6b in 2027. This would be a notable 9.1% improvement in revenue compared to the last 12 months. Earnings are expected to improve, with RHI Magnesita India forecast to report a statutory profit of ₹14.15 per share. In the lead-up to this report, the analysts had been modelling revenues of ₹45.5b and earnings per share (EPS) of ₹17.17 in 2027. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
View our latest analysis for RHI Magnesita India
The consensus price target fell 13% to ₹545, with the weaker earnings outlook clearly leading valuation estimates. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic RHI Magnesita India analyst has a price target of ₹590 per share, while the most pessimistic values it at ₹489. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that RHI Magnesita India's revenue growth is expected to slow, with the forecast 12% annualised growth rate until the end of 2027 being well below the historical 17% p.a. growth over the last five years. Compare this with other companies in the same industry, which are forecast to see a revenue decline of 4.5% annually. Factoring in the forecast slowdown in growth, it's pretty clear that RHI Magnesita India is still expected to grow faster than 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 RHI Magnesita India. Unfortunately, they also downgraded their revenue estimates, and our data indicates that is expected to perform better than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.
With that in mind, we wouldn't be too quick to come to a conclusion on RHI Magnesita India. Long-term earnings power is much more important than next year's profits. We have forecasts for RHI Magnesita India going out to 2028, and you can see them free on our platform here.
Don't forget that there may still be risks. For instance, we've identified 1 warning sign for RHI Magnesita India that 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.