The most recent earnings announcement GAIL (India) Limited’s (NSE:GAIL) released in March 2018 revealed that the company benefited from a robust tailwind, eventuating to a double-digit earnings growth of 42.3%. Investors may find it useful to understand how market analysts predict GAIL (India)’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.
Analysts’ outlook for this coming year seems buoyant, with earnings increasing by a robust 15.2%. This growth seems to continue into the following year with rates reaching double digit 26.6% compared to today’s earnings, and finally hitting ₹62.49b by 2021.
Although it is useful to understand the growth rate each year relative to today’s value, it may be more insightful gauging the rate at which the earnings are rising or falling every year, on average. The pro of this technique is that it ignores near term flucuations and accounts for the overarching direction of GAIL (India)’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 9.5%. This means, we can assume GAIL (India) will grow its earnings by 9.5% every year for the next few years.
For GAIL (India), I’ve put together three fundamental aspects you should further examine:
- 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.
- Valuation: What is GAIL 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 GAIL is currently mispriced by the market.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of GAIL? 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 firstname.lastname@example.org.