This Everest Kanto Cylinder Limited (NSE:EKC) Analyst Is Way More Bearish Than They Used To Be

Market forces rained on the parade of Everest Kanto Cylinder Limited (NSE:EKC) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the solitary analyst covering Everest Kanto Cylinder provided consensus estimates of ₹14b revenue in 2023, which would reflect a definite 15% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to dive 37% to ₹10.30 in the same period. Previously, the analyst had been modelling revenues of ₹17b and earnings per share (EPS) of ₹19.00 in 2023. It looks like analyst sentiment has declined substantially, with a measurable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

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It'll come as no surprise then, to learn that the analyst has cut their price target 38% to ₹106.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that sales are expected to reverse, with a forecast 28% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 26% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 13% per year. It's pretty clear that Everest Kanto Cylinder's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Everest Kanto Cylinder's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from the analyst, we'd understand if readers now felt a bit wary of Everest Kanto Cylinder.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Everest Kanto Cylinder going out as far as 2024, 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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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.