Revenue Miss: Steel Authority of India Limited Fell 15% Short Of Analyst Revenue Estimates And Analysts Have Been Revising Their Models

Steel Authority of India Limited (NSE:SAIL) shareholders are probably feeling a little disappointed, since its shares fell 4.6% to ₹127 in the week after its latest third-quarter results. Revenues were ₹233b, 15% below analyst expectations, although losses didn't appear to worsen significantly, with a per-share statutory loss of ₹5.27 being in line with what the analysts forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.

See our latest analysis for Steel Authority of India

Taking into account the latest results, Steel Authority of India's 16 analysts currently expect revenues in 2025 to be ₹1.07t, approximately in line with the last 12 months. Statutory earnings per share are predicted to bounce 24% to ₹9.33. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹1.10t and earnings per share (EPS) of ₹10.66 in 2025. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

What's most unexpected is that the consensus price target rose 9.2% to ₹104, strongly implying the downgrade to forecasts is not expected to be more than a temporary blip. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Steel Authority of India at ₹150 per share, while the most bearish prices it at ₹70.00. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

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. It's pretty clear that there is an expectation that Steel Authority of India's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 0.6% growth on an annualised basis. This is compared to a historical growth rate of 15% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 8.6% per year. Factoring in the forecast slowdown in growth, it seems obvious that Steel Authority of India is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Steel Authority of India. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Steel Authority of India analysts - going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 2 warning signs we've spotted with Steel Authority of India .

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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.