Downgrade: Here's How This Analyst Sees Navkar Corporation Limited (NSE:NAVKARCORP) Performing In The Near Term

The latest analyst coverage could presage a bad day for Navkar Corporation Limited (NSE:NAVKARCORP), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with the analyst seeing grey clouds on the horizon.

Following the downgrade, the consensus from lone analyst covering Navkar is for revenues of ₹5.9b in 2023, implying a stressful 35% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to fall 19% to ₹4.80 in the same period. Prior to this update, the analyst had been forecasting revenues of ₹9.9b and earnings per share (EPS) of ₹5.70 in 2023. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a considerable drop in earnings per share numbers as well.

Check out the opportunities and risks within the IN Infrastructure industry.

It'll come as no surprise then, to learn that the analyst has cut their price target 17% to ₹81.00.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that sales are expected to reverse, with a forecast 58% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 18% 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 24% annually for the foreseeable future. It's pretty clear that Navkar's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that the analyst cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Navkar's revenues are expected to grow slower than the wider market. Given the scope of the downgrades, it would not be a surprise to see the market become more wary of the business.

Uncomfortably, our automated valuation tool also suggests that Navkar stock could be overvalued following the downgrade. Shareholders could be left disappointed if these estimates play out. 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.