Deepak Fertilisers And Petrochemicals Corporation Limited (NSE:DEEPAKFERT) Analysts Are More Bearish Than They Used To Be

The latest analyst coverage could presage a bad day for Deepak Fertilisers And Petrochemicals Corporation Limited (NSE:DEEPAKFERT), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.

Following the downgrade, the consensus from two analysts covering Deepak Fertilisers And Petrochemicals is for revenues of ₹90b in 2024, implying an uncomfortable 13% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to plummet 20% to ₹42.55 in the same period. Before this latest update, the analysts had been forecasting revenues of ₹102b and earnings per share (EPS) of ₹51.90 in 2024. Indeed, we can see that the analysts are a lot more bearish about Deepak Fertilisers And Petrochemicals' prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.

See our latest analysis for Deepak Fertilisers And Petrochemicals

The average price target climbed 5.1% to ₹740 despite the reduced earnings forecasts, suggesting that this earnings impact could be a positive for the stock, once it passes.

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 sales are expected to reverse, with a forecast 24% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 14% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Deepak Fertilisers And Petrochemicals is expected to lag the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. The increasing price target is not intuitively what we would expect to see, given these downgrades, and we'd suggest shareholders revisit their investment thesis before making a decision.

Unfortunately, the earnings downgrade - if accurate - may also place pressure on Deepak Fertilisers And Petrochemicals' mountain of debt, which could lead to some belt tightening for shareholders. To see more of our financial analysis, you can click through to our free platform to learn more about its balance sheet and specific concerns we've identified.

You can also see our analysis of Deepak Fertilisers And Petrochemicals' Board and CEO remuneration and experience, and whether company insiders have been buying stock.

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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.