Stock Analysis

Carysil Limited (NSE:CARYSIL) Stock's 28% Dive Might Signal An Opportunity But It Requires Some Scrutiny

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NSEI:CARYSIL

The Carysil Limited (NSE:CARYSIL) share price has fared very poorly over the last month, falling by a substantial 28%. Instead of being rewarded, shareholders who have already held through the last twelve months are now sitting on a 49% share price drop.

Although its price has dipped substantially, it's still not a stretch to say that Carysil's price-to-earnings (or "P/E") ratio of 24.3x right now seems quite "middle-of-the-road" compared to the market in India, where the median P/E ratio is around 27x. While this might not raise any eyebrows, if the P/E ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Carysil could be doing better as it's been growing earnings less than most other companies lately. One possibility is that the P/E is moderate because investors think this lacklustre earnings performance will turn around. If not, then existing shareholders may be a little nervous about the viability of the share price.

Check out our latest analysis for Carysil

NSEI:CARYSIL Price to Earnings Ratio vs Industry February 18th 2025
Want the full picture on analyst estimates for the company? Then our free report on Carysil will help you uncover what's on the horizon.

Is There Some Growth For Carysil?

There's an inherent assumption that a company should be matching the market for P/E ratios like Carysil's to be considered reasonable.

If we review the last year of earnings growth, the company posted a worthy increase of 7.6%. Still, lamentably EPS has fallen 7.1% in aggregate from three years ago, which is disappointing. Accordingly, shareholders would have felt downbeat about the medium-term rates of earnings growth.

Shifting to the future, estimates from the four analysts covering the company suggest earnings should grow by 37% over the next year. With the market only predicted to deliver 26%, the company is positioned for a stronger earnings result.

With this information, we find it interesting that Carysil is trading at a fairly similar P/E to the market. It may be that most investors aren't convinced the company can achieve future growth expectations.

The Final Word

With its share price falling into a hole, the P/E for Carysil looks quite average now. While the price-to-earnings ratio shouldn't be the defining factor in whether you buy a stock or not, it's quite a capable barometer of earnings expectations.

Our examination of Carysil's analyst forecasts revealed that its superior earnings outlook isn't contributing to its P/E as much as we would have predicted. When we see a strong earnings outlook with faster-than-market growth, we assume potential risks are what might be placing pressure on the P/E ratio. At least the risk of a price drop looks to be subdued, but investors seem to think future earnings could see some volatility.

Plus, you should also learn about this 1 warning sign we've spotted with Carysil.

If you're unsure about the strength of Carysil's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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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.