Newsflash: Bata India Limited (NSE:BATAINDIA) Analysts Have Been Trimming Their Revenue Forecasts

One thing we could say about the analysts on Bata India Limited (NSE:BATAINDIA) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

Following the downgrade, the most recent consensus for Bata India from its three analysts is for revenues of ₹39b in 2024 which, if met, would be a notable 16% increase on its sales over the past 12 months. Statutory earnings per share are presumed to leap 27% to ₹31.77. Previously, the analysts had been modelling revenues of ₹43b and earnings per share (EPS) of ₹32.70 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a measurable cut to revenue estimates and a minor downgrade to EPS estimates to boot.

View our latest analysis for Bata India

Analysts made no major changes to their price target of ₹1,682, suggesting the downgrades are not expected to have a long-term impact on Bata India's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Bata India analyst has a price target of ₹1,989 per share, while the most pessimistic values it at ₹1,404. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Bata India shareholders.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing stands out from these estimates, which is that Bata India is forecast to grow faster in the future than it has in the past, with revenues expected to display 16% annualised growth until the end of 2024. If achieved, this would be a much better result than the 0.8% annual decline over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 13% annually. Not only are Bata India's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider 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. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on Bata India after today.

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. See why we're concerned about Bata India's balance sheet by visiting our risks dashboard for free on our platform here.

You can also see our analysis of Bata India's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.