Looking at Indraprastha Gas Limited’s (NSE:IGL) earnings update in March 2018, it seems that analyst expectations are fairly bearish, with profits predicted to rise by 10.02% next year compared with the higher past 5-year average growth rate of 13.33%. With trailing-twelve-month net income at current levels of ₹7.22b, we should see this rise to ₹7.94b in 2019. Below is a brief commentary around Indraprastha Gas’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.

Check out our latest analysis for Indraprastha Gas

Can we expect Indraprastha Gas to keep growing?

The longer term expectations from the 19 analysts of IGL is tilted towards the positive sentiment. Given that it becomes hard to forecast far into the future, broker analysts tend to project ahead roughly three years. To understand the overall trajectory of IGL’s earnings growth over these next fews years, I’ve fitted a line through these analyst earnings forecast to determine an annual growth rate from the slope.

From the current net income level of ₹7.22b and the final forecast of ₹10.44b by 2021, the annual rate of growth for IGL’s earnings is 11.55%. This leads to an EPS of ₹14.9 in the final year of projections relative to the current EPS of ₹10.31. The primary reason for earnings growth is due to a higher revenue growth of 12.80% outpacing cost increases. Analysts are predicting earnings growth to outpace revenue by the end of 2021, resulting in a margin expansion from 15.72% to 16.51%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For Indraprastha Gas, I’ve compiled three pertinent aspects you should further research:

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 Indraprastha Gas 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 Indraprastha Gas is currently mispriced by the market.

3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Indraprastha Gas? 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.