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Will UltraTech Cement Limited's (NSE:ULTRACEMCO) Earnings Grow In The Years Ahead?

Simply Wall St

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The most recent earnings update UltraTech Cement Limited's (NSE:ULTRACEMCO) released in June 2019 signalled that the business gained from a slight tailwind, eventuating to a single-digit earnings growth of 9.6%. Investors may find it useful to understand how market analysts perceive UltraTech Cement's earnings growth trajectory over the next few years and whether the future looks even brighter than the past. Note that I will be looking at net income excluding extraordinary items to get a better understanding of the underlying drivers of earnings.

View our latest analysis for UltraTech Cement

Analysts' outlook for the upcoming year seems positive, with earnings climbing by a significant 53%. This high growth in earnings is expected to continue, bringing the bottom line up to ₹53b by 2022.

NSEI:ULTRACEMCO Past and Future Earnings, July 4th 2019

Although it’s helpful to understand the growth rate each year relative to today’s level, it may be more valuable estimating the rate at which the company is rising or falling on average every year. The advantage of this approach is that it removes the impact of near term flucuations and accounts for the overarching direction of UltraTech Cement's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've appended a line of best fit through analyst consensus of forecasted earnings. The slope of this line is the rate of earnings growth, which in this case is 27%. This means that, we can presume UltraTech Cement will grow its earnings by 27% every year for the next few years.

Next Steps:

For UltraTech Cement, I've put together three relevant factors you should further examine:

  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 ULTRACEMCO 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 ULTRACEMCO is currently mispriced by the market.
  3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of ULTRACEMCO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.