There's been a notable change in appetite for Adani Power Limited (NSE:ADANIPOWER) shares in the week since its quarterly report, with the stock down 10% to ₹61.80. It was a pretty bad result overall; while revenues were in line with expectations at ₹59b, losses exploded to ₹3.21 per share. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest forecasts to see what analysts are expecting for next year.

View our latest analysis for Adani Power

After the latest results, the consensus from Adani Power's three analysts is for revenues of ₹250.6b in 2020, which would reflect a noticeable 6.3% decline in sales compared to the last year of performance. Losses are forecast to balloon 87% to ₹0.50 per share. Before this latest report, the consensus had been expecting revenues of ₹244.5b and ₹1.17 per share in losses. There's been a pretty noticeable increase in sentiment, with analysts upgrading revenues and making a massive increase in earnings per share in particular

The consensus price target rose 12% to ₹34.60, with analysts encouraged by the higher revenue and lower forecast losses for next year. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Adani Power, with the most bullish analyst valuing it at ₹48.00 and the most bearish at ₹20.00 per share. This is a fairly broad spread of estimates, suggesting that analysts are forecasting a wide range of possible outcomes for the business.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with the forecast 6.3% revenue decline a notable change from historical growth of 3.2% over the last five years. Compare this with our data, which suggests that other companies in the same market are, in aggregate, expected to see their revenue grow 7.2% next year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - analysts also expect Adani Power to grow slower than the wider market.

The Bottom Line

The most important thing to take away is that analysts increased their loss per share estimates for next year. Fortunately, analysts also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider market. There was also a nice increase in the price target, with analysts feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Adani Power. Long-term earnings power is much more important than next year's profits. We have forecasts for Adani Power going out to 2021, and you can see them free on our platform here.

You can also see whether Adani Power is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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