Time To Worry? Analysts Are Downgrading Their Sagar Cements Limited (NSE:SAGCEM) Outlook

Today is shaping up negative for Sagar Cements Limited (NSE:SAGCEM) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Both revenue and earnings per share (EPS) estimates were cut sharply as analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, Sagar Cements' eight analysts currently expect revenues in 2025 to be ₹24b, approximately in line with the last 12 months. The loss per share is anticipated to greatly reduce in the near future, narrowing 71% to ₹1.77. Yet before this consensus update, the analysts had been forecasting revenues of ₹28b and losses of ₹0.72 per share in 2025. So there's been quite a change-up of views after the recent consensus updates, with the analysts making a serious cut to their revenue forecasts while also expecting losses per share to increase.

Check out our latest analysis for Sagar Cements

The consensus price target was broadly unchanged at ₹250, perhaps implicitly signalling that the weaker earnings outlook is not expected to have a long-term impact on the valuation.

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 0.3% by the end of 2025. This indicates a significant reduction from annual growth of 18% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 4.1% annually for the foreseeable future. So it's pretty clear that Sagar Cements' revenues are expected to shrink slower than the wider industry.

The Bottom Line

The most important thing to note from this downgrade is that the consensus increased its forecast losses this year, suggesting all may not be well at Sagar Cements. Sadly they also cut their revenue estimates, although at least the company is expected to perform a bit better than the wider market. The lack of change in the price target is puzzling in light of the downgrade but, with a serious decline expected this year, we wouldn't be surprised if investors were a bit wary of Sagar Cements.

Worse, Sagar Cements is labouring under a substantial debt burden, which - if today's forecasts prove accurate - the forecast downgrade could potentially exacerbate. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

You can also see our analysis of Sagar Cements' 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.