Atul Ltd Just Missed Earnings - But Analysts Have Updated Their Models

Last week, you might have seen that Atul Ltd (NSE:ATUL) released its annual result to the market. The early response was not positive, with shares down 9.1% to ₹8,953 in the past week. It looks like the results were a bit of a negative overall. While revenues of ₹51b were in line with analyst predictions, statutory earnings were less than expected, missing estimates by 6.1% to hit ₹204 per share. 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.

Check out our latest analysis for Atul

Taking into account the latest results, the most recent consensus for Atul from seven analysts is for revenues of ₹56.0b in 2023 which, if met, would be a decent 10% increase on its sales over the past 12 months. Statutory earnings per share are predicted to shoot up 25% to ₹255. Before this earnings report, the analysts had been forecasting revenues of ₹57.3b and earnings per share (EPS) of ₹274 in 2023. 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.

Despite the cuts to forecast earnings, there was no real change to the ₹9,756 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. 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 Atul at ₹11,492 per share, while the most bearish prices it at ₹7,884. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Atul's growth to accelerate, with the forecast 10% annualised growth to the end of 2023 ranking favourably alongside historical growth of 7.5% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to see revenue growth of 14% annually. So it's clear that despite the acceleration in growth, Atul is expected to grow meaningfully slower than the industry average.

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 revenues are expected to perform worse than the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. 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. At Simply Wall St, we have a full range of analyst estimates for Atul going out to 2025, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Atul (of which 1 doesn't sit too well with us!) 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.