Larsen & Toubro Limited Earnings Missed Analyst Estimates: Here’s What Analysts Are Forecasting Now

Feb 1, 2024

Shareholders might have noticed that Larsen & Toubro Limited (NSE:LT) filed its third-quarter result this time last week. The early response was not positive, with shares down 3.0% to ₹3,480 in the past week. Statutory earnings per share of ₹21.42 unfortunately missed expectations by 16%, although it was encouraging to see revenues of ₹551b exceed expectations by 2.5%. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Check out our latest analysis for Larsen & Toubro

NSEI:LT Earnings and Revenue Growth February 1st 2024

Taking into account the latest results, the most recent consensus for Larsen & Toubro from 29 analysts is for revenues of ₹2.50t in 2025. If met, it would imply a solid 16% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to surge 35% to ₹124. In the lead-up to this report, the analysts had been modelling revenues of ₹2.45t and earnings per share (EPS) of ₹124 in 2025. There doesn’t appear to have been a major change in sentiment following the results, other than the small lift in revenue estimates.

The consensus price target increased 6.5% to ₹3,870, with an improved revenue forecast carrying the promise of a more valuable business, in time. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Larsen & Toubro, with the most bullish analyst valuing it at ₹4,399 and the most bearish at ₹1,874 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

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 Larsen & Toubro’s rate of growth is expected to accelerate meaningfully, with the forecast 12% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 8.4% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 12% per year. Factoring in the forecast acceleration in revenue, it’s pretty clear that Larsen & Toubro is expected to grow at about the same rate as 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. There was also an upgrade to revenue estimates, although as we saw earlier, forecast growth is only expected to be about the same as the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn’t be too quick to come to a conclusion on Larsen & Toubro. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Larsen & Toubro going out to 2026, and you can see them free on our platform here..

And what about risks? Every company has them, and we’ve spotted 2 warning signs for Larsen & Toubro you should know about.

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

Find out whether Larsen & Toubro 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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