Analysts Are More Bearish On Aarti Industries Limited (NSE:AARTIIND) Than They Used To Be

One thing we could say about the analysts on Aarti Industries Limited (NSE:AARTIIND) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the latest downgrade, the 18 analysts covering Aarti Industries provided consensus estimates of ₹69b revenue in 2023, which would reflect a not inconsiderable 11% decline on its sales over the past 12 months. Statutory earnings per share are supposed to dive 58% to ₹14.53 in the same period. Prior to this update, the analysts had been forecasting revenues of ₹80b and earnings per share (EPS) of ₹23.45 in 2023. Indeed, we can see that the analysts are a lot more bearish about Aarti Industries' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Aarti Industries

It'll come as no surprise then, to learn that the analysts have cut their price target 13% to ₹774. 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. There are some variant perceptions on Aarti Industries, with the most bullish analyst valuing it at ₹999 and the most bearish at ₹550 per share. 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 Aarti Industries shareholders.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 21% by the end of 2023. This indicates a significant reduction from annual growth of 23% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 12% per year. It's pretty clear that Aarti Industries' revenues are expected to perform substantially worse than the wider 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 Aarti Industries. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

There might be good reason for analyst bearishness towards Aarti Industries, like a weak balance sheet. For more information, you can click here to discover this and the 2 other warning signs we've identified.

You can also see our analysis of Aarti Industries' 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.