What You Need To Know About The Chemplast Sanmar Limited (NSE:CHEMPLASTS) Analyst Downgrade Today

Market forces rained on the parade of Chemplast Sanmar Limited (NSE:CHEMPLASTS) shareholders today, when the analysts downgraded their forecasts for this year. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the two analysts covering Chemplast Sanmar, is for revenues of ₹51b in 2023, which would reflect a considerable 13% reduction in Chemplast Sanmar's sales over the past 12 months. Statutory earnings per share are supposed to plummet 34% to ₹22.80 in the same period. Previously, the analysts had been modelling revenues of ₹57b and earnings per share (EPS) of ₹22.80 in 2023. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a measurable cut to revenues and reconfirming their earnings per share estimates.

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Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 25% by the end of 2023. This indicates a significant reduction from annual growth of 16% over the last year. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 12% annually for the foreseeable future. It's pretty clear that Chemplast Sanmar's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. 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. 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 Chemplast Sanmar after today.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have analyst estimates for Chemplast Sanmar going out as far as 2025, 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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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.