Earnings Report: JK Tyre & Industries Limited Missed Revenue Estimates By 13%
JK Tyre & Industries Limited (NSE:JKTYRE) shareholders are probably feeling a little disappointed, since its shares fell 4.8% to ₹391 in the week after its latest first-quarter results. Revenues were ₹39b, 13% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of ₹27.24 being in line with what the analysts anticipated. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, JK Tyre & Industries' five analysts are now forecasting revenues of ₹181.9b in 2027. This would be a decent 11% improvement in revenue compared to the last 12 months. Statutory earnings per share are expected to fall 15% to ₹19.40 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ₹185.5b and earnings per share (EPS) of ₹26.73 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 large cut to EPS estimates.
View our latest analysis for JK Tyre & Industries
It might be a surprise to learn that the consensus price target fell 8.6% to ₹497, with the analysts clearly linking lower forecast earnings to the performance of the stock price. 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. Currently, the most bullish analyst values JK Tyre & Industries at ₹600 per share, while the most bearish prices it at ₹420. 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.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. The analysts are definitely expecting JK Tyre & Industries' growth to accelerate, with the forecast 15% annualised growth to the end of 2027 ranking favourably alongside historical growth of 6.5% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 12% per year. JK Tyre & Industries 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 JK Tyre & Industries. Happily, there were no real changes to revenue forecasts, with the business still expected to grow in line with the overall industry. 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.
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 JK Tyre & Industries analysts - going out to 2029, and you can see them free on our platform here.
You should always think about risks though. Case in point, we've spotted 2 warning signs for JK Tyre & Industries 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.