Need To Know: Analysts Just Made A Substantial Cut To Their TCNS Clothing Co. Limited (NSE:TCNSBRANDS) Estimates

The latest analyst coverage could presage a bad day for TCNS Clothing Co. Limited (NSE:TCNSBRANDS), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from TCNS Clothing's four analysts is for revenues of ₹13b in 2024 which - if met - would reflect an okay 7.0% increase on its sales over the past 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 77% to ₹2.10. Before this latest update, the analysts had been forecasting revenues of ₹14b and earnings per share (EPS) of ₹3.77 in 2024. There looks to have been a major change in sentiment regarding TCNS Clothing's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

Check out our latest analysis for TCNS Clothing

The consensus price target was broadly unchanged at ₹460, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. It's clear from the latest estimates that TCNS Clothing's rate of growth is expected to accelerate meaningfully, with the forecast 9.5% annualised revenue growth to the end of 2024 noticeably faster than its historical growth of 0.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 13% annually. So it's clear that despite the acceleration in growth, TCNS Clothing is expected to grow meaningfully slower than the industry average.

The Bottom Line

The most important thing to take away is that analysts are expecting TCNS Clothing to become unprofitable this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that TCNS Clothing's revenues are expected to grow slower 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 TCNS Clothing after the downgrade.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with TCNS Clothing's financials, such as dilutive stock issuance over the past year. Learn more, and discover the 1 other risk we've identified, for 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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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.