The Sterlite Technologies Limited (NSE:STLTECH) Analysts Have Been Trimming Their Sales Forecasts

The analysts covering Sterlite Technologies Limited (NSE:STLTECH) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the latest downgrade, Sterlite Technologies' dual analysts currently expect revenues in 2025 to be ₹55b, approximately in line with the last 12 months. The losses are expected to disappear over the next year or so, with forecasts for a profit of ₹1.70 per share this year. Prior to this update, the analysts had been forecasting revenues of ₹72b and earnings per share (EPS) of ₹9.60 in 2025. Indeed, we can see that the analysts are a lot more bearish about Sterlite Technologies' prospects, administering a sizeable cut to revenue estimates and slashing their EPS estimates to boot.

View our latest analysis for Sterlite Technologies

The consensus price target fell 10% to ₹140, with the weaker earnings outlook clearly leading analyst valuation estimates.

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. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 0.2% by the end of 2025. This indicates a significant reduction from annual growth of 5.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 20% annually for the foreseeable future. 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales 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 Sterlite Technologies after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Sterlite Technologies, including dilutive stock issuance over the past year. For more information, you can click here to discover this and the 3 other warning signs 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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