Chambal Fertilisers and Chemicals Limited Earnings Missed Analyst Estimates: Here's What Analysts Are Forecasting Now

Last week, you might have seen that Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT) released its quarterly result to the market. The early response was not positive, with shares down 2.8% to ₹308 in the past week. Statutory earnings per share disappointed, coming in -37% short of expectations, at ₹6.59. Fortunately revenue performance was a lot stronger, with revenues of ₹86b arriving 13% ahead of predictions. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

Our analysis indicates that CHAMBLFERT is potentially undervalued!

Following last week's earnings report, Chambal Fertilisers and Chemicals' three analysts are forecasting 2023 revenues to be ₹240.9b, approximately in line with the last 12 months. Per-share earnings are expected to bounce 22% to ₹38.00. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹184.8b and earnings per share (EPS) of ₹38.90 in 2023. Although sales sentiment looks to be improving, the analysts have made a minor downgrade to per-share earnings estimates, perhaps acknowledging the investment required to grow the business.

There's been no major changes to the price target of ₹432, suggesting that the impact of higher forecast sales and lower earnings won't result in a meaningful change to the business' valuation. 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. The most optimistic Chambal Fertilisers and Chemicals analyst has a price target of ₹480 per share, while the most pessimistic values it at ₹365. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Chambal Fertilisers and Chemicals is an easy business to forecast or the the analysts are all using similar assumptions.

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. We would highlight that Chambal Fertilisers and Chemicals' revenue growth is expected to slow, with the forecast 1.3% annualised growth rate until the end of 2023 being well below the historical 19% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 12% per year. Factoring in the forecast slowdown in growth, it seems obvious that Chambal Fertilisers and Chemicals is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Chambal Fertilisers and Chemicals. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. 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.

With that in mind, we wouldn't be too quick to come to a conclusion on Chambal Fertilisers and Chemicals. Long-term earnings power is much more important than next year's profits. We have forecasts for Chambal Fertilisers and Chemicals going out to 2025, and you can see them free on our platform here.

You should always think about risks though. Case in point, we've spotted 4 warning signs for Chambal Fertilisers and Chemicals you should be aware of, and 2 of them don't sit too well with us.

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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.