Greenply Industries Limited (NSE:GREENPLY) Analysts Are Reducing Their Forecasts For This Year

One thing we could say about the analysts on Greenply Industries Limited (NSE:GREENPLY) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the five analysts covering Greenply Industries provided consensus estimates of ₹11b revenue in 2021, which would reflect a stressful 20% decline on its sales over the past 12 months. Statutory earnings per share are supposed to dip 10.0% to ₹3.47 in the same period. Before this latest update, the analysts had been forecasting revenues of ₹14b and earnings per share (EPS) of ₹7.62 in 2021. Indeed, we can see that the analysts are a lot more bearish about Greenply Industries' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Greenply Industries

It'll come as no surprise then, to learn that the analysts have cut their price target 14% to ₹129. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Greenply Industries analyst has a price target of ₹175 per share, while the most pessimistic values it at ₹91.11. This is a fairly broad spread of estimates, suggesting that the 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. One more thing stood out to us about these estimates, and it's the idea that Greenply Industries'decline is expected to accelerate, with revenues forecast to fall 20% next year, topping off a historical decline of 1.0% a year over the past five years. Compare this against analyst estimates for companies in the wider industry, which suggest that revenues (in aggregate) are expected to grow 8.4% next year. So while a broad number of companies are forecast to grow, unfortunately Greenply Industries is expected to see its sales affected worse than other companies in the industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Greenply Industries.

A high debt burden combined with a downgrade of this magnitude always gives us some reason for concern, especially if these forecasts are just the first sign of a business downturn. You can learn more about our debt analysis for free on our platform here.

We also provide an overview of the Greenply Industries Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

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