Revenue Beat: JK Tyre & Industries Limited Beat Analyst Estimates By 8.1%
Shareholders might have noticed that JK Tyre & Industries Limited (NSE:JKTYRE) filed its second-quarter result this time last week. The early response was not positive, with shares down 8.6% to ₹304 in the past week. Results overall were respectable, with statutory earnings of ₹27.24 per share roughly in line with what the analysts had forecast. Revenues of ₹48b came in 8.1% ahead of analyst predictions. 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. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
Taking into account the latest results, the consensus forecast from JK Tyre & Industries' five analysts is for revenues of ₹185.7b in 2027. This reflects a satisfactory 7.8% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to plunge 25% to ₹12.88 in the same period. In the lead-up to this report, the analysts had been modelling revenues of ₹181.9b and earnings per share (EPS) of ₹19.40 in 2027. So it's pretty clear the analysts have mixed opinions on JK Tyre & Industries after the latest results; even though they upped their revenue numbers, it came at the cost of a pretty serious reduction to per-share earnings expectations.
Check out our latest analysis for JK Tyre & Industries
The analysts also cut JK Tyre & Industries' price target 13% to ₹423, implying that lower forecast earnings are expected to have a more negative impact than can be offset by the increase in revenue. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. The most optimistic JK Tyre & Industries analyst has a price target of ₹510 per share, while the most pessimistic values it at ₹330. 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. It's clear from the latest estimates that JK Tyre & Industries' rate of growth is expected to accelerate meaningfully, with the forecast 16% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 6.0% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that JK Tyre & Industries is expected to grow much faster than its industry.
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, they also upgraded their revenue estimates, and are forecasting them to grow faster than the wider 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for JK Tyre & Industries going out to 2029, and you can see them free on our platform here..
Even so, be aware that JK Tyre & Industries is showing 2 warning signs in our investment analysis , and 1 of those is significant...
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