U.S. Markets closed

What Should We Expect From UltraTech Cement Limited’s (NSE:ULTRACEMCO) Earnings In The Next 12 Months?

Sebastian Eder

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

As UltraTech Cement Limited (NSE:ULTRACEMCO) released its earnings announcement on 31 December 2018, analysts seem highly optimistic, with profits predicted to ramp up by an impressive 71% next year, compared with the past 5-year average growth rate of 0.08%. Currently with trailing-twelve-month earnings of ₹22b, we can expect this to reach ₹38b by 2020. In this article, I’ve outline a few earnings growth rates to give you a sense of the market sentiment for UltraTech Cement in the longer term. For those interested in more of an analysis of the company, you can research its fundamentals here.

Check out our latest analysis for UltraTech Cement

How will UltraTech Cement perform in the near future?

The 16 analysts covering ULTRACEMCO view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I’ve plotted out each year’s earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of ULTRACEMCO’s earnings growth over these next few years.

NSEI:ULTRACEMCO Future Profit February 4th 19

This results in an annual growth rate of 30% based on the most recent earnings level of ₹22b to the final forecast of ₹55b by 2022. EPS reaches ₹166.93 in the final year of forecast compared to the current ₹80.94 EPS today. With a current profit margin of 7.1%, this movement will result in a margin of 13% by 2022.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For UltraTech Cement, I’ve put together three essential aspects you should look at:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is UltraTech Cement worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether UltraTech Cement is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of UltraTech Cement? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.