Analysts Just Made A Major Revision To Their Sharda Cropchem Limited (NSE:SHARDACROP) Revenue Forecasts

Today is shaping up negative for Sharda Cropchem Limited (NSE:SHARDACROP) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

After this downgrade, Sharda Cropchem's seven analysts are now forecasting revenues of ₹41b in 2024. This would be a credible 5.9% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 7.5% to ₹23.65 in the same period. Before this latest update, the analysts had been forecasting revenues of ₹47b and earnings per share (EPS) of ₹44.61 in 2024. Indeed, we can see that the analysts are a lot more bearish about Sharda Cropchem's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Sharda Cropchem

The consensus price target fell 9.7% to ₹621, with the weaker earnings outlook clearly leading analyst valuation estimates. 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. The most optimistic Sharda Cropchem analyst has a price target of ₹720 per share, while the most pessimistic values it at ₹570. Still, with such a tight range of estimates, it suggests the analysts have a pretty good idea of what they think the company is worth.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Sharda Cropchem's past performance and to peers in the same industry. It's pretty clear that there is an expectation that Sharda Cropchem's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.9% growth on an annualised basis. This is compared to a historical growth rate of 19% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 10% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Sharda Cropchem.

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 Sharda Cropchem. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sharda Cropchem's revenues are expected to grow slower than the wider market. Furthermore, there was a cut to the price target, suggesting that the latest news has led to more pessimism about the intrinsic value of the business. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Sharda Cropchem after today.

Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Sharda Cropchem going out to 2025, and you can see them free on our platform here.

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.