This Broker Just Slashed Their Gujarat State Fertilizers & Chemicals Limited (NSE:GSFC) Earnings Forecasts

Market forces rained on the parade of Gujarat State Fertilizers & Chemicals Limited (NSE:GSFC) shareholders today, when the covering analyst downgraded their forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analyst has soured majorly on the business. Shares are up 8.7% to ₹164 in the past week. We'd be curious to see if the downgrade is enough to reverse investor sentiment on the business.

Following the downgrade, the consensus from sole analyst covering Gujarat State Fertilizers & Chemicals is for revenues of ₹88b in 2024, implying a definite 16% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to plummet 46% to ₹14.00 in the same period. Prior to this update, the analyst had been forecasting revenues of ₹98b and earnings per share (EPS) of ₹15.60 in 2024. Indeed, we can see that the analyst is a lot more bearish about Gujarat State Fertilizers & Chemicals' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Gujarat State Fertilizers & Chemicals

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 20% by the end of 2024. This indicates a significant reduction from annual growth of 15% 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 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Gujarat State Fertilizers & Chemicals is expected to lag the wider industry.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Gujarat State Fertilizers & Chemicals. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Gujarat State Fertilizers & Chemicals' revenues are expected to grow slower than the wider market. After a cut like that, investors could be forgiven for thinking the analyst is a lot more bearish on Gujarat State Fertilizers & Chemicals, and a few readers might choose to steer clear of the stock.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Gujarat State Fertilizers & Chemicals could now be moderately overvalued. Learn why, and examine the assumptions that underpin our valuation by visiting our free platform here to learn more about our valuation approach.

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 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.