Downgrade: Here's How Analysts See Amber Enterprises India Limited (NSE:AMBER) Performing In The Near Term

Today is shaping up negative for Amber Enterprises India Limited (NSE:AMBER) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the most recent consensus for Amber Enterprises India from its eleven analysts is for revenues of ₹43b in 2022 which, if met, would be a substantial 43% increase on its sales over the past 12 months. Per-share earnings are expected to bounce 95% to ₹48.73. Previously, the analysts had been modelling revenues of ₹51b and earnings per share (EPS) of ₹63.09 in 2022. Indeed, we can see that the analysts are a lot more bearish about Amber Enterprises India's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Amber Enterprises India

Analysts made no major changes to their price target of ₹2,787, suggesting the downgrades are not expected to have a long-term impact on Amber Enterprises India's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Amber Enterprises India at ₹3,573 per share, while the most bearish prices it at ₹1,554. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's clear from the latest estimates that Amber Enterprises India's rate of growth is expected to accelerate meaningfully, with the forecast 43% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 16% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 19% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Amber Enterprises India is expected to grow much faster than its industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Amber Enterprises India. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Amber Enterprises India after the downgrade.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Amber Enterprises India going out to 2025, and you can see them free on our platform here.

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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