Revenue Downgrade: Here's What Analysts Forecast For GAIL (India) Limited (NSE:GAIL)

One thing we could say about the analysts on GAIL (India) Limited (NSE:GAIL) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

After the downgrade, the consensus from GAIL (India)'s seven analysts is for revenues of ₹1.1t in 2023, which would reflect a noticeable 3.5% decline in sales compared to the last year of performance. Statutory earnings per share are anticipated to plummet 32% to ₹13.80 in the same period. Prior to this update, the analysts had been forecasting revenues of ₹1.3t and earnings per share (EPS) of ₹13.68 in 2023. Indeed we can see that the consensus opinion has undergone some fundamental changes following the recent consensus updates, with a measurable cut to revenues and some minor tweaks to earnings numbers.

View our latest analysis for GAIL (India)

The consensus has reconfirmed its price target of ₹118, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on GAIL (India)'s market value. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values GAIL (India) at ₹210 per share, while the most bearish prices it at ₹76.67. We would probably assign less value to the forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily on the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with a forecast 4.7% annualised revenue decline to the end of 2023. That is a notable change from historical growth of 9.3% over the last three years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 6.0% per year. It's pretty clear that GAIL (India)'s revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that GAIL (India)'s revenues are expected to grow slower than the wider market. Given the stark change in sentiment, we'd understand if investors became more cautious on GAIL (India) after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have estimates - from multiple GAIL (India) analysts - going out to 2025, and you can see them free on our platform here.

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.