Downgrade: Here's How Analysts See Sterlite Technologies Limited (NSE:STLTECH) Performing In The Near Term

Market forces rained on the parade of Sterlite Technologies Limited (NSE:STLTECH) shareholders today, when the analysts downgraded their forecasts for this year. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from three analysts covering Sterlite Technologies is for revenues of ₹63b in 2024, implying a definite 9.5% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to drop 20% to ₹5.50 in the same period. Previously, the analysts had been modelling revenues of ₹73b and earnings per share (EPS) of ₹9.87 in 2024. Indeed, we can see that the analysts are a lot more bearish about Sterlite Technologies' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Sterlite Technologies

Despite the cuts to forecast earnings, there was no real change to the ₹185 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 Sterlite Technologies' past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 12% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 9.6% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 21% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Sterlite Technologies is expected to lag the wider 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 Sterlite Technologies. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Sterlite Technologies' 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 Sterlite Technologies.

Uncomfortably, our automated valuation tool also suggests that Sterlite Technologies stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. You can learn more about our valuation methodology for 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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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.