Eternal Limited Just Missed Earnings - But Analysts Have Updated Their Models
Shareholders might have noticed that Eternal Limited (NSE:ETERNAL) filed its quarterly result this time last week. The early response was not positive, with shares down 2.4% to ₹317 in the past week. Revenue of ₹241b surpassed estimates by 2.8%, although statutory earnings per share missed badly, coming in 47% below expectations at ₹0.13 per share. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Eternal after the latest results.
Following the latest results, Eternal's 30 analysts are now forecasting revenues of ₹1.01t in 2027. This would be a sizeable 30% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to jump 100% to ₹1.07. In the lead-up to this report, the analysts had been modelling revenues of ₹975.8b and earnings per share (EPS) of ₹1.65 in 2027. While next year's revenue estimates increased, there was also a large cut to EPS expectations, suggesting the consensus has a bit of a mixed view of these results.
See our latest analysis for Eternal
There's been no major changes to the price target of ₹380, suggesting that the impact of higher forecast revenue and lower earnings won't result in a meaningful change to the business' 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. Currently, the most bullish analyst values Eternal at ₹513 per share, while the most bearish prices it at ₹220. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.
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. The period to the end of 2027 brings more of the same, according to the analysts, with revenue forecast to display 68% growth on an annualised basis. That is in line with its 58% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 19% annually. So it's pretty clear that Eternal is forecast to grow substantially faster than its 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. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. The consensus price target held steady at ₹380, with the latest estimates not enough to have an impact on their price targets.
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 Eternal analysts - going out to 2029, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for Eternal you should know about.
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