The Market Lifts Camlin Fine Sciences Limited (NSE:CAMLINFINE) Shares 29% But It Can Do More

Camlin Fine Sciences Limited (NSE:CAMLINFINE) shareholders have had their patience rewarded with a 29% share price jump in the last month. Looking back a bit further, it's encouraging to see the stock is up 31% in the last year.

Although its price has surged higher, there still wouldn't be many who think Camlin Fine Sciences' price-to-sales (or "P/S") ratio of 1.6x is worth a mention when the median P/S in India's Chemicals industry is similar at about 1.5x. While this might not raise any eyebrows, if the P/S ratio is not justified investors could be missing out on a potential opportunity or ignoring looming disappointment.

Check out our latest analysis for Camlin Fine Sciences

What Does Camlin Fine Sciences' P/S Mean For Shareholders?

With revenue growth that's inferior to most other companies of late, Camlin Fine Sciences has been relatively sluggish. It might be that many expect the uninspiring revenue performance to strengthen positively, which has kept the P/S ratio from falling. If not, then existing shareholders may be a little nervous about the viability of the share price.

Want the full picture on analyst estimates for the company? Then our free report on Camlin Fine Sciences will help you uncover what's on the horizon.

How Is Camlin Fine Sciences' Revenue Growth Trending?

Camlin Fine Sciences' P/S ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the industry.

Taking a look back first, we see that there was hardly any revenue growth to speak of for the company over the past year. Still, the latest three year period was better as it's delivered a decent 23% overall rise in revenue. So it appears to us that the company has had a mixed result in terms of growing revenue over that time.

Looking ahead now, revenue is anticipated to climb by 18% during the coming year according to the one analyst following the company. With the industry only predicted to deliver 14%, the company is positioned for a stronger revenue result.

With this in consideration, we find it intriguing that Camlin Fine Sciences' P/S is closely matching its industry peers. Apparently some shareholders are skeptical of the forecasts and have been accepting lower selling prices.

What We Can Learn From Camlin Fine Sciences' P/S?

Its shares have lifted substantially and now Camlin Fine Sciences' P/S is back within range of the industry median. Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

Despite enticing revenue growth figures that outpace the industry, Camlin Fine Sciences' P/S isn't quite what we'd expect. There could be some risks that the market is pricing in, which is preventing the P/S ratio from matching the positive outlook. At least the risk of a price drop looks to be subdued, but investors seem to think future revenue could see some volatility.

Having said that, be aware Camlin Fine Sciences is showing 1 warning sign in our investment analysis, you should know about.

If you're unsure about the strength of Camlin Fine Sciences' 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.