Market forces rained on the parade of Capacit'e Infraprojects Limited (NSE:CAPACITE) shareholders today, when the covering analyst downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.
After the downgrade, the solo analyst covering Capacit'e Infraprojects is now predicting revenues of ₹18b in 2022. If met, this would reflect a huge 57% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to leap 72% to ₹12.60. Before this latest update, the analyst had been forecasting revenues of ₹21b and earnings per share (EPS) of ₹16.10 in 2022. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. For example, we noticed that Capacit'e Infraprojects' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 57% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 0.7% a year over the past year. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 15% per year. Not only are Capacit'e Infraprojects' revenues expected to improve, it seems that the analyst is also expecting it to grow faster than 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 Capacit'e Infraprojects. Unfortunately, the analyst also downgraded their revenue estimates, although our data indicates revenues are expected to perform better than the wider market. After a cut like that, investors could be forgiven for thinking the analyst is a lot more bearish on Capacit'e Infraprojects, and a few readers might choose to steer clear of the stock.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have analyst estimates for Capacit'e Infraprojects going out as far as 2023, and you can see them free on our platform here.
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
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