Some Analysts Just Cut Their Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT) Estimates

The latest analyst coverage could presage a bad day for Chambal Fertilisers and Chemicals Limited (NSE:CHAMBLFERT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from three analysts covering Chambal Fertilisers and Chemicals is for revenues of ₹215b in 2024, implying a concerning 23% decline in sales compared to the last 12 months. Per-share earnings are expected to jump 29% to ₹32.17. Before this latest update, the analysts had been forecasting revenues of ₹251b and earnings per share (EPS) of ₹35.73 in 2024. Indeed, we can see that analyst sentiment has declined measurably after the new consensus came out, with a substantial drop in revenue estimates and a minor downgrade to EPS estimates to boot.

See our latest analysis for Chambal Fertilisers and Chemicals

The consensus price target fell 10% to ₹314, with the weaker earnings outlook clearly leading analyst valuation estimates. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Chambal Fertilisers and Chemicals, with the most bullish analyst valuing it at ₹325 and the most bearish at ₹300 per share. This is a very narrow spread of estimates, implying either that Chambal Fertilisers and Chemicals is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 23% by the end of 2024. This indicates a significant reduction from annual growth of 23% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 10% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Chambal Fertilisers and Chemicals is expected to lag the wider industry.

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 Chambal Fertilisers and Chemicals. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Chambal Fertilisers and Chemicals' revenues are expected to grow slower than the wider market. The consensus price target fell measurably, with analysts seemingly not reassured by recent business developments, leading to a lower estimate of Chambal Fertilisers and Chemicals' future valuation. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Chambal Fertilisers and Chemicals after today.

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

Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.

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