Arvind Fashions Limited (NSE:ARVINDFASN) Analysts Just Trimmed Their Revenue Forecasts By 21%

One thing we could say about the analysts on Arvind Fashions Limited (NSE:ARVINDFASN) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. This report focused on revenue estimates, and it looks as though the consensus view of the business has become substantially more conservative.

After this downgrade, Arvind Fashions' twin analysts are now forecasting revenues of ₹29b in 2022. This would be a major 30% improvement in sales compared to the last 12 months. Prior to the latest estimates, the analysts were forecasting revenues of ₹37b in 2022. The consensus view seems to have become more pessimistic on Arvind Fashions, noting the pretty serious reduction to revenue estimates in this update.

View our latest analysis for Arvind Fashions

There was no particular change to the consensus price target of ₹149, with Arvind Fashions' latest outlook seemingly not enough to result in a change of valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. Currently, the most bullish analyst values Arvind Fashions at ₹165 per share, while the most bearish prices it at ₹132. This is a very narrow spread of estimates, implying either that Arvind Fashions is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Arvind Fashions' past performance and to peers in the same industry. For example, we noticed that Arvind Fashions' rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 30% growth to the end of 2022 on an annualised basis. That is well above its historical decline of 23% a year over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. So it looks like Arvind Fashions is expected to grow faster than its competitors, at least for a while.

The Bottom Line

The most important thing to take away is that analysts cut their revenue estimates for this year. They're also forecasting more rapid revenue growth than the wider market. Overall, given the drastic downgrade to this year's forecasts, we'd be feeling a little more wary of Arvind Fashions going forwards.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Arvind Fashions' financials, such as major dilution from new stock issuance in the past year. For more information, you can click here to discover this and the 2 other concerns we've identified.

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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