It's been a good week for RITES Limited (NSE:RITES) shareholders, because the company has just released its latest quarterly results, and the shares gained 3.4% to ₹195. Revenues came in 6.8% below expectations, at ₹5.6b. Statutory earnings per share were relatively better off, with a per-share profit of ₹8.54 being roughly in line with analyst 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. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the current consensus from RITES' three analysts is for revenues of ₹26.6b in 2027. This would reflect a credible 7.9% increase on its revenue over the past 12 months. Per-share earnings are expected to climb 12% to ₹9.42. In the lead-up to this report, the analysts had been modelling revenues of ₹28.3b and earnings per share (EPS) of ₹10.63 in 2027. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a real cut to earnings per share estimates.
View our latest analysis for RITES
Despite the cuts to forecast earnings, there was no real change to the ₹278 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic RITES analyst has a price target of ₹289 per share, while the most pessimistic values it at ₹267. This is a very narrow spread of estimates, implying either that RITES is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.
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. For example, we noticed that RITES' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 16% growth to the end of 2027 on an annualised basis. That is well above its historical decline of 2.7% a year over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 11% per year. Not only are RITES' revenues expected to improve, it seems that the analysts are also expecting it 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 RITES. Regrettably, they also downgraded their revenue estimates, but the latest forecasts still imply the business will grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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. We have estimates - from multiple RITES analysts - going out to 2029, and you can see them free on our platform here.
You still need to take note of risks, for example - RITES has 1 warning sign we think you should be aware of.
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