Tarsons Products Limited (NSE:TARSONS) Analysts Are More Bearish Than They Used To Be

One thing we could say about the analysts on Tarsons Products Limited (NSE:TARSONS) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the three analysts covering Tarsons Products are now predicting revenues of ₹2.9b in 2024. If met, this would reflect a modest 5.3% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to reduce 8.9% to ₹10.40 in the same period. Before this latest update, the analysts had been forecasting revenues of ₹3.0b and earnings per share (EPS) of ₹11.00 in 2024. Forecasts are clearly less bullish than previously, given the reduced revenue forecasts and the minor downgrade to earnings per share expectations.

See our latest analysis for Tarsons Products

Despite the cuts to forecast earnings, there was no real change to the ₹637 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Tarsons Products' past performance and to peers in the same industry. One thing stands out from these estimates, which is that Tarsons Products is forecast to grow faster in the future than it has in the past, with revenues expected to display 11% annualised growth until the end of 2024. If achieved, this would be a much better result than the 8.7% annual decline over the past year. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 19% annually for the foreseeable future. So although Tarsons Products' revenue growth is expected to improve, it is still expected to grow slower than the industry.

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 Tarsons Products. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Tarsons Products' revenues are expected to grow slower 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 Tarsons Products.

In light of the downgrade, our automated discounted cash flow valuation tool suggests that Tarsons Products 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.