Sumitomo Chemical India Limited Just Beat Analyst Forecasts, And Analysts Have Been Updating Their Predictions

Investors in Sumitomo Chemical India Limited (NSE:SUMICHEM) had a good week, as its shares rose 9.3% to close at ₹566 following the release of its quarterly results. Revenues ₹9.9b disappointed slightly, at4.7% below what the analysts had predicted. Profits were a relative bright spot, with statutory per-share earnings of ₹3.85 coming in 10% above what was anticipated. 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. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Sumitomo Chemical India after the latest results.

See our latest analysis for Sumitomo Chemical India

Taking into account the latest results, the current consensus from Sumitomo Chemical India's six analysts is for revenues of ₹32.7b in 2025. This would reflect a satisfactory 7.6% increase on its revenue over the past 12 months. Per-share earnings are expected to accumulate 7.3% to ₹10.39. Before this earnings report, the analysts had been forecasting revenues of ₹33.5b and earnings per share (EPS) of ₹10.19 in 2025. So it looks like the analysts have become a bit less optimistic after the latest results announcement, with revenues expected to fall even as the company is supposed to maintain EPS.

The consensus has reconfirmed its price target of ₹562, showing that the analysts don't expect weaker revenue expectations next year to have a material impact on Sumitomo Chemical India's market value. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values Sumitomo Chemical India at ₹659 per share, while the most bearish prices it at ₹510. This is a very narrow spread of estimates, implying either that Sumitomo Chemical India is an easy company to value, or - more likely - the analysts are relying heavily on some key assumptions.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting Sumitomo Chemical India's growth to accelerate, with the forecast 16% annualised growth to the end of 2025 ranking favourably alongside historical growth of 5.4% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Sumitomo Chemical India is expected to grow at about the same rate as the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Sadly, they also downgraded their revenue forecasts, but the business is still expected to grow at roughly the same rate as the industry itself. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at ₹562, with the latest estimates not enough to have an impact on their price targets.

Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Sumitomo Chemical India going out to 2027, and you can see them free on our platform here.

Another thing to consider is whether management and directors have been buying or selling stock recently. We provide an overview of all open market stock trades for the last twelve months on our platform, here.

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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.