Need To Know: This Analyst Just Made A Substantial Cut To Their Bodal Chemicals Limited (NSE:BODALCHEM) Estimates

The analyst covering Bodal Chemicals Limited (NSE:BODALCHEM) 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) forecasts went under the knife, suggesting the analyst has soured majorly on the business.

Following the latest downgrade, Bodal Chemicals' single analyst currently expects revenues in 2024 to be ₹14b, approximately in line with the last 12 months. Statutory earnings per share are anticipated to tumble 36% to ₹0.90 in the same period. Previously, the analyst had been modelling revenues of ₹16b and earnings per share (EPS) of ₹3.90 in 2024. Indeed, we can see that the analyst is a lot more bearish about Bodal Chemicals' prospects, administering a substantial drop in revenue estimates and slashing their EPS estimates to boot.

Check out our latest analysis for Bodal Chemicals

The average price target climbed 11% to ₹90.00 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

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. It's pretty clear that there is an expectation that Bodal Chemicals' revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 0.2% growth on an annualised basis. This is compared to a historical growth rate of 8.0% 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 10% 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 Bodal Chemicals.

The Bottom Line

The biggest issue in the new estimates is that the analyst has reduced their earnings per share estimates, suggesting business headwinds lay ahead for Bodal Chemicals. Unfortunately the analyst also downgraded their revenue estimates, and industry data suggests that Bodal Chemicals' revenues are expected to grow slower than the wider market. The rising price target is a puzzle, but still - with a serious cut to this year's outlook, we wouldn't be surprised if investors were a bit wary of Bodal Chemicals.

After a downgrade like this, it's pretty clear that previous forecasts were too optimistic. What's more, we've spotted several possible issues with Bodal Chemicals' business, like its declining profit margins. For more information, you can click here to discover this and the 2 other flags we've identified.

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.