SJVN Limited (NSE:SJVN) Analysts Just Cut Their EPS Forecasts Substantially

The latest analyst coverage could presage a bad day for SJVN Limited (NSE:SJVN), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting analysts have soured majorly on the business.

After the downgrade, the four analysts covering SJVN are now predicting revenues of ₹49b in 2025. If met, this would reflect a huge 87% improvement in sales compared to the last 12 months. Statutory earnings per share are presumed to shoot up 45% to ₹3.20. Before this latest update, the analysts had been forecasting revenues of ₹57b and earnings per share (EPS) of ₹4.47 in 2025. Indeed, we can see that the analysts are a lot more bearish about SJVN's prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for SJVN

The average price target climbed 26% to ₹88.13 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. For example, we noticed that SJVN's rate of growth is expected to accelerate meaningfully, with revenues forecast to exhibit 65% growth to the end of 2025 on an annualised basis. That is well above its historical decline of 0.8% a year over the past five years. Compare this against analyst estimates for the broader industry, which suggest that (in aggregate) industry revenues are expected to grow 8.1% annually. Not only are SJVN's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than 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 SJVN. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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.

There might be good reason for analyst bearishness towards SJVN, like its declining profit margins. For more information, you can click here to discover this and the 2 other concerns 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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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.