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In April 2019, Reliance Industries Limited (NSE:RELIANCE) announced its latest earnings update, which showed that the business gained from a small tailwind, eventuating to a single-digit earnings growth of 9.7%. Below is a brief commentary on my key takeaways on how market analysts predict Reliance Industries's earnings growth trajectory over the next couple of 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.

Check out our latest analysis for Reliance Industries

Analysts' expectations for this coming year seems optimistic, with earnings growing by a robust 18%. This growth seems to continue into the following year with rates reaching double digit 43% compared to today’s earnings, and finally hitting ₹599b by 2022.

Although it’s informative understanding the growth year by year relative to today’s level, it may be more insightful to determine the rate at which the business is growing every year, on average. The benefit of this method is that it removes the impact of near term flucuations and accounts for the overarching direction of Reliance Industries's earnings trajectory over time, which may be more relevant for long term investors. To compute this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 13%. This means that, we can assume Reliance Industries will grow its earnings by 13% every year for the next few years.

Next Steps:

For Reliance Industries, I've compiled three key factors 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 RELIANCE 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 RELIANCE is currently mispriced by the market.

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