Earnings Update: Cello World Limited (NSE:CELLO) Just Reported And Analysts Are Trimming Their Forecasts

Cello World Limited (NSE:CELLO) missed earnings with its latest half-year results, disappointing overly-optimistic forecasters. Cello World missed analyst forecasts, with revenues of ₹9.9b and statutory earnings per share (EPS) of ₹3.69, falling short by 2.6% and 2.9% respectively. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Cello World after the latest results.

Check out our latest analysis for Cello World

Taking into account the latest results, the consensus forecast from Cello World's six analysts is for revenues of ₹21.4b in 2025. This reflects a modest 5.3% improvement in revenue compared to the last 12 months. Per-share earnings are expected to accumulate 4.8% to ₹16.03. In the lead-up to this report, the analysts had been modelling revenues of ₹22.8b and earnings per share (EPS) of ₹17.52 in 2025. The analysts are less bullish than they were before these results, given the reduced revenue forecasts and the small dip in earnings per share expectations.

It'll come as no surprise then, to learn that the analysts have cut their price target 6.8% to ₹940. 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. There are some variant perceptions on Cello World, with the most bullish analyst valuing it at ₹1,000 and the most bearish at ₹880 per share. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Cello World is an easy business to forecast or the the analysts are all using similar assumptions.

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. It's clear from the latest estimates that Cello World's rate of growth is expected to accelerate meaningfully, with the forecast 11% annualised revenue growth to the end of 2025 noticeably faster than its historical growth of 7.7% over the past year. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 17% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Cello World is expected to grow slower than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target fell measurably, with the analysts seemingly not reassured by the latest results, leading to a lower estimate of Cello World's future valuation.

With that in mind, we wouldn't be too quick to come to a conclusion on Cello World. Long-term earnings power is much more important than next year's profits. We have forecasts for Cello World going out to 2027, and you can see them free on our platform here.

You still need to take note of risks, for example - Cello World has 2 warning signs (and 1 which is significant) we think you should know about.

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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.