One NLC India Limited (NSE:NLCINDIA) Analyst Is Reducing Their Forecasts For This Year

The latest analyst coverage could presage a bad day for NLC India Limited (NSE:NLCINDIA), with the covering analyst making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) estimates were cut sharply as the analyst factored in the latest outlook for the business, concluding that they were too optimistic previously.

Following the latest downgrade, the current consensus, from the single analyst covering NLC India, is for revenues of ₹135b in 2024, which would reflect a small 7.4% reduction in NLC India's sales over the past 12 months. Statutory earnings per share are anticipated to nosedive 22% to ₹14.50 in the same period. Previously, the analyst had been modelling revenues of ₹177b and earnings per share (EPS) of ₹21.30 in 2024. It looks like analyst sentiment has declined substantially, with a sizeable cut to revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for NLC India

The average price target climbed 41% to ₹281 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that sales are expected to reverse, with a forecast 7.4% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 11% 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 16% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - NLC India is expected to lag 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. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

As you can see, this broker clearly isn't bullish, and there might be good reason for that. We've identified some potential issues with NLC India's financials, such as a weak balance sheet. For more information, you can click here to discover this and the 2 other flags we've identified.

You can also see our analysis of NLC India's Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.