Atul Ltd (NSE:ATUL) Analysts Are More Bearish Than They Used To Be

The analysts covering Atul Ltd (NSE:ATUL) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) estimates were cut sharply as the analysts factored in the latest outlook for the business, concluding that they were too optimistic previously.

After the downgrade, the nine analysts covering Atul are now predicting revenues of ₹58b in 2024. If met, this would reflect a modest 6.4% improvement in sales compared to the last 12 months. Per-share earnings are expected to ascend 13% to ₹197. Prior to this update, the analysts had been forecasting revenues of ₹64b and earnings per share (EPS) of ₹243 in 2024. Indeed, we can see that the analysts are a lot more bearish about Atul's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Atul

It'll come as no surprise then, to learn that the analysts have cut their price target 11% to ₹6,971. 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 Atul, with the most bullish analyst valuing it at ₹8,445 and the most bearish at ₹5,340 per share. This shows there is still some 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.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Atul's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 6.4% growth on an annualised basis. This is compared to a historical growth rate of 9.9% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 11% annually. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Atul.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Atul. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Atul's revenues are expected to grow slower than the wider market. After such a stark change in sentiment from analysts, we'd understand if readers now felt a bit wary of Atul.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Atul analysts - going out to 2026, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.