Analyst Estimates: Here’s What Brokers Think Of Aditya Birla Fashion and Retail Limited (NSE:ABFRL) After Its Third-Quarter Report

Feb 18, 2024

Last week, you might have seen that Aditya Birla Fashion and Retail Limited (NSE:ABFRL) released its quarterly result to the market. The early response was not positive, with shares down 8.7% to ₹231 in the past week. Revenues of ₹42b beat expectations by a respectable 2.6%, although statutory losses per share increased. Aditya Birla Fashion and Retail lost ₹0.81, which was 35% more than what the analysts had included in their models. 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 collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Aditya Birla Fashion and Retail

NSEI:ABFRL Earnings and Revenue Growth February 17th 2024

After the latest results, the 20 analysts covering Aditya Birla Fashion and Retail are now predicting revenues of ₹165.5b in 2025. If met, this would reflect a substantial 23% improvement in revenue compared to the last 12 months. Losses are predicted to fall substantially, shrinking 98% to ₹0.10. Yet prior to the latest earnings, the analysts had been forecasting revenues of ₹166.0b and losses of ₹1.06 per share in 2025. While the revenue estimates were largely unchanged, sentiment seems to have improved, with the analysts upgrading their numbers and making a very promising decrease in losses per share in particular.

The average price target held steady at ₹236, seeming to indicate that business is performing in line with expectations. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Aditya Birla Fashion and Retail at ₹277 per share, while the most bearish prices it at ₹188. 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.

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 Aditya Birla Fashion and Retail’s rate of growth is expected to accelerate meaningfully, with the forecast 18% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 13% p.a. 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 22% per year. So it’s clear that despite the acceleration in growth, Aditya Birla Fashion and Retail is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that the analysts reconfirmed their loss per share estimates for next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it’s tracking in line with expectations. Although our data does suggest that Aditya Birla Fashion and Retail’s revenue is expected to perform worse than the wider industry. The consensus price target held steady at ₹236, with the latest estimates not enough to have an impact on their price targets.

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 forecasts for Aditya Birla Fashion and Retail going out to 2026, and you can see them free on our platform here.

You can also see whether Aditya Birla Fashion and Retail is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

Valuation is complex, but we’re helping make it simple.

Find out whether Aditya Birla Fashion and Retail is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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