Analysts Are Updating Their Chemplast Sanmar Limited (NSE:CHEMPLASTS) Estimates After Its Second-Quarter Results

Chemplast Sanmar Limited (NSE:CHEMPLASTS) last week reported its latest second-quarter results, which makes it a good time for investors to dive in and see if the business is performing in line with expectations. Revenues of ₹9.9b came in a modest 6.6% below forecasts. Statutory losses were a relative bright spot though, with a per-share loss of ₹1.95 coming in a substantial 35% smaller than what the analysts had expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for Chemplast Sanmar

After the latest results, the four analysts covering Chemplast Sanmar are now predicting revenues of ₹46.8b in 2025. If met, this would reflect a decent 15% improvement in revenue compared to the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹46.9b and earnings per share (EPS) of ₹28.05 in 2025. While the analysts have made no real change to their revenue estimates, we can see that the consensus is now modelling a loss next year - a clear dip in sentiment compared to the previous outlook of a profit.

The consensus price target held steady at ₹569, seemingly implying that the higher forecast losses are not expected to have a long term impact on the company's 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. There are some variant perceptions on Chemplast Sanmar, with the most bullish analyst valuing it at ₹615 and the most bearish at ₹535 per share. This is a very narrow spread of estimates, implying either that Chemplast Sanmar 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. One thing stands out from these estimates, which is that Chemplast Sanmar is forecast to grow faster in the future than it has in the past, with revenues expected to display 32% annualised growth until the end of 2025. If achieved, this would be a much better result than the 14% annual decline over the past three years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue grow 13% per year. Not only are Chemplast Sanmar's revenues expected to improve, it seems that the analysts are also expecting it to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that the analysts are expecting Chemplast Sanmar to become unprofitable next year. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster 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 Chemplast Sanmar. Long-term earnings power is much more important than next year's profits. We have forecasts for Chemplast Sanmar going out to 2027, and you can see them free on our platform here.

Before you take the next step you should know about the 1 warning sign for Chemplast Sanmar that we have uncovered.

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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.