ITC Limited (NSE:ITC) Analysts Are Cutting Their Estimates: Here's What You Need To Know
As you might know, ITC Limited (NSE:ITC) recently reported its quarterly numbers. It was a credible result overall, with revenues of ₹191b and statutory earnings per share of ₹16.51 both in line with analyst estimates, showing that ITC is executing in line with expectations. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on ITC after the latest results.
Taking into account the latest results, the current consensus, from the 25 analysts covering ITC, is for revenues of ₹733.8b in 2027. This implies a noticeable 4.1% reduction in ITC's revenue over the past 12 months. Statutory earnings per share are expected to decline 11% to ₹14.15 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹809.0b and earnings per share (EPS) of ₹15.90 in 2027. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a real cut to earnings per share numbers.
See our latest analysis for ITC
The analysts made no major changes to their price target of ₹332, suggesting the downgrades are not expected to have a long-term impact on ITC's valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic ITC analyst has a price target of ₹486 per share, while the most pessimistic values it at ₹290. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await ITC shareholders.
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 revenue is expected to reverse, with a forecast 5.4% annualised decline to the end of 2027. That is a notable change from historical growth of 6.7% 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 5.7% per year. It's pretty clear that ITC's revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for ITC. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
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 ITC analysts - going out to 2029, and you can see them free on our platform here.
We don't want to rain on the parade too much, but we did also find 1 warning sign for ITC that you need to be mindful of.
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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.