Results: Arvind Limited Exceeded Expectations And The Consensus Has Updated Its Estimates
Arvind Limited (NSE:ARVIND) just released its quarterly report and things are looking bullish. The company beat expectations with revenues of ₹29b arriving 3.7% ahead of forecasts. Statutory earnings per share (EPS) were ₹5.54, 8.6% ahead of estimates. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Following the latest results, Arvind's seven analysts are now forecasting revenues of ₹113.9b in 2027. This would be a decent 9.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to climb 11% to ₹19.35. Before this earnings report, the analysts had been forecasting revenues of ₹112.4b and earnings per share (EPS) of ₹23.00 in 2027. The analysts seem to have become more bearish following the latest results. While there were no changes to revenue forecasts, there was a substantial drop in EPS estimates.
Check out our latest analysis for Arvind
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹662, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Arvind, with the most bullish analyst valuing it at ₹731 and the most bearish at ₹564 per share. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arvind's past performance and to peers in the same industry. It's clear from the latest estimates that Arvind's rate of growth is expected to accelerate meaningfully, with the forecast 21% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 4.1% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 14% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Arvind to grow faster than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. 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.
With that in mind, we wouldn't be too quick to come to a conclusion on Arvind. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Arvind 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 Arvind that you need to be mindful of.
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