Sobha Limited Just Missed Earnings - But Analysts Have Updated Their Models
It's shaping up to be a tough period for Sobha Limited (NSE:SOBHA), which a week ago released some disappointing quarterly results that could have a notable impact on how the market views the stock. The analysts look to have been far too optimistic in the lead-up to these results, with revenues of (₹9.7b) coming in 31% below what they had expected. Statutory earnings per share of ₹3.08 fell 50% short. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sobha after the latest results.
Taking into account the latest results, the current consensus from Sobha's 17 analysts is for revenues of ₹60.8b in 2027. This would reflect a solid 18% increase on its revenue over the past 12 months. Per-share earnings are expected to soar 107% to ₹37.04. Before this earnings report, the analysts had been forecasting revenues of ₹62.0b and earnings per share (EPS) of ₹45.58 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 real cut to EPS estimates.
Check out our latest analysis for Sobha
It might be a surprise to learn that the consensus price target was broadly unchanged at ₹1,726, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. 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. The most optimistic Sobha analyst has a price target of ₹1,930 per share, while the most pessimistic values it at ₹1,350. 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.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sobha's past performance and to peers in the same industry. The analysts are definitely expecting Sobha's growth to accelerate, with the forecast 38% annualised growth to the end of 2027 ranking favourably alongside historical growth of 15% per annum 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 25% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Sobha 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 Sobha. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at ₹1,726, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Sobha going out to 2029, and you can see them free on our platform here.
Plus, you should also learn about the 1 warning sign we've spotted with Sobha .
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