Need To Know: Analysts Just Made A Substantial Cut To Their Chemplast Sanmar Limited (NSE:CHEMPLASTS) Estimates

Today is shaping up negative for Chemplast Sanmar Limited (NSE:CHEMPLASTS) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the consensus from three analysts covering Chemplast Sanmar is for revenues of ₹42b in 2024, implying a noticeable 2.7% decline in sales compared to the last 12 months. After this downgrade, the company is anticipated to report a loss of ₹1.75 in 2024, a sharp decline from a profit over the last year. Previously, the analysts had been modelling revenues of ₹49b and earnings per share (EPS) of ₹24.20 in 2024. There looks to have been a major change in sentiment regarding Chemplast Sanmar's prospects, with a substantial drop in revenues and the analysts now forecasting a loss instead of a profit.

View our latest analysis for Chemplast Sanmar

The consensus price target fell 8.3% to ₹537, implicitly signalling that lower earnings per share are a leading indicator for Chemplast Sanmar's valuation.

Of course, another way to look at these forecasts is to place them into context against the industry itself. One thing that stands out from these estimates is that shrinking revenues are expected to moderate over the period ending 2024 compared to the historical decline of 26% per annum over the past year. Compare this against analyst estimates for companies in the broader industry, which suggest that revenues (in aggregate) are expected to grow 11% annually. So it's pretty clear that, while it does have declining revenues, the analysts also expect Chemplast Sanmar to suffer worse than the wider industry.

The Bottom Line

The biggest low-light for us was that the forecasts for Chemplast Sanmar dropped from profits to a loss this year. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Chemplast Sanmar's revenues are expected to grow slower than the wider market. With a serious cut to this year's expectations and a falling price target, we wouldn't be surprised if investors were becoming wary of Chemplast Sanmar.

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 Chemplast Sanmar's business, like its declining profit margins. Learn more, and discover the 1 other warning sign we've identified, for free on our platform here.

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.