Shree Cement Limited Just Missed EPS By 19%: Here's What Analysts Think Will Happen Next
It's been a good week for Shree Cement Limited (NSE:SHREECEM) shareholders, because the company has just released its latest quarterly results, and the shares gained 4.5% to ₹23,300. Results were mixed, with revenues of ₹59b exceeding expectations, even as earnings per share (EPS) came up short. Statutory earnings were ₹72.56 per share, -19% below whatthe analysts had forecast. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the recent earnings report, the consensus from 23 analysts covering Shree Cement is for revenues of ₹223.5b in 2027. This implies a small 3.0% decline in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 5.4% to ₹463. Before this earnings report, the analysts had been forecasting revenues of ₹238.3b and earnings per share (EPS) of ₹541 in 2027. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
Check out our latest analysis for Shree Cement
The analysts made no major changes to their price target of ₹26,754, suggesting the downgrades are not expected to have a long-term impact on Shree Cement's valuation. 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 Shree Cement at ₹31,450 per share, while the most bearish prices it at ₹19,600. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
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. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 5.8% by the end of 2027. This indicates a significant reduction from annual growth of 7.5% over the last five years. Yet aggregate analyst estimates for other companies in the industry suggest that industry revenues are forecast to decline 1.9% per year. The forecasts do look bearish for Shree Cement, since they're expecting it to shrink faster than the industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Shree Cement. Unfortunately they also cut their revenue estimates for next year. Forecasts imply the business' revenue is expected to perform worse than the wider industry. That said, earnings per share are more important for creating value for shareholders. 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple Shree Cement analysts - going out to 2029, and you can see them free on our platform here.
However, before you get too enthused, we've discovered 1 warning sign for Shree Cement that you should be aware of.
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