It's been a good week for Zen Technologies Limited (NSE:ZENTEC) shareholders, because the company has just released its latest quarterly results, and the shares gained 9.5% to ₹1,711. Revenue of ₹3.5b beat expectations by an impressive 40%, while statutory earnings per share (EPS) were ₹21.52, in line with 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the consensus forecast from Zen Technologies' six analysts is for revenues of ₹12.9b in 2027. This reflects a substantial 55% improvement in revenue compared to the last 12 months. Per-share earnings are expected to jump 72% to ₹40.05. Before this earnings report, the analysts had been forecasting revenues of ₹11.9b and earnings per share (EPS) of ₹39.80 in 2027. There doesn't appear to have been a major change in sentiment following the results, other than the slight bump in revenue estimates.
See our latest analysis for Zen Technologies
The analysts increased their price target 11% to ₹1,960, perhaps signalling that higher revenues are a strong leading indicator for Zen Technologies's valuation. 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. Currently, the most bullish analyst values Zen Technologies at ₹2,176 per share, while the most bearish prices it at ₹1,705. This is a very narrow spread of estimates, implying either that Zen Technologies is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. It's clear from the latest estimates that Zen Technologies' rate of growth is expected to accelerate meaningfully, with the forecast 141% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 40% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 16% annually. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Zen Technologies to grow faster than the wider industry.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Pleasantly, they also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow faster than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.
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 forecasts for Zen Technologies 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 1 warning sign for Zen Technologies that you need to be mindful of.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.