Tatva Chintan Pharma Chem Limited Just Missed Revenue By 15%: Here's What Analysts Think Will Happen Next

Last week, you might have seen that Tatva Chintan Pharma Chem Limited (NSE:TATVA) released its first-quarter result to the market. The early response was not positive, with shares down 6.1% to ₹2,269 in the past week. Revenues were ₹884m, 15% below analyst expectations, although losses didn't appear to worsen significantly, with a statutory per-share loss of ₹44.59 being in line with what the analysts 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. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Tatva Chintan Pharma Chem

Taking into account the latest results, the consensus forecast from Tatva Chintan Pharma Chem's four analysts is for revenues of ₹5.09b in 2023, which would reflect a huge 23% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to increase 9.9% to ₹40.90. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹5.24b and earnings per share (EPS) of ₹47.60 in 2023. From this we can that sentiment has definitely become more bearish after the latest results, leading to lower revenue forecasts and a substantial drop in earnings per share estimates.

The analysts made no major changes to their price target of ₹2,662, suggesting the downgrades are not expected to have a long-term impact on Tatva Chintan Pharma Chem's valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. Currently, the most bullish analyst values Tatva Chintan Pharma Chem at ₹2,774 per share, while the most bearish prices it at ₹2,385. With such a narrow range of valuations, the analysts apparently share similar views on what they think the business is worth.

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. It's clear from the latest estimates that Tatva Chintan Pharma Chem's rate of growth is expected to accelerate meaningfully, with the forecast 31% annualised revenue growth to the end of 2023 noticeably faster than its historical growth of 17% over the past year. Compare this with other companies in the same industry, which are forecast to grow their revenue 12% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Tatva Chintan Pharma Chem is expected to grow much faster than its industry.

The Bottom Line

The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. They also downgraded their revenue estimates, although industry data suggests that Tatva Chintan Pharma Chem's revenues are 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.

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 Tatva Chintan Pharma Chem going out to 2025, and you can see them free on our platform here.

You can also see our analysis of Tatva Chintan Pharma Chem's 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.