These Analysts Just Made A Meaningful Downgrade To Their IIFL Finance Limited (NSE:IIFL) EPS Forecasts

Market forces rained on the parade of IIFL Finance Limited (NSE:IIFL) shareholders today, when the analysts downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business. Investors however, have been notably more optimistic about IIFL Finance recently, with the stock price up a remarkable 18% to ₹405 in the past week. Whether the downgrade will have a negative impact on demand for shares is yet to be seen.

We've discovered 4 warning signs about IIFL Finance. View them for free.

Following the downgrade, the current consensus from IIFL Finance's three analysts is for revenues of ₹70b in 2026 which - if met - would reflect a decent 16% increase on its sales over the past 12 months. Statutory earnings per share are presumed to shoot up 292% to ₹34.99. Prior to this update, the analysts had been forecasting revenues of ₹81b and earnings per share (EPS) of ₹47.82 in 2026. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for IIFL Finance

What's most unexpected is that the consensus price target rose 19% to ₹483, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that IIFL Finance's revenue growth is expected to slow, with the forecast 16% annualised growth rate until the end of 2026 being well below the historical 20% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 7.8% annually. So it's pretty clear that, while IIFL Finance's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

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. Unfortunately, analysts also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

There might be good reason for analyst bearishness towards IIFL Finance, like its declining profit margins. Learn more, and discover the 2 other flags we've identified, for free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks with high insider ownership.

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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.