Tatva Chintan Pharma Chem Limited (NSE:TATVA) Analysts Are Reducing Their Forecasts For This Year

The latest analyst coverage could presage a bad day for Tatva Chintan Pharma Chem Limited (NSE:TATVA), with the analysts making across-the-board cuts to their statutory estimates that might leave shareholders a little shell-shocked. Revenue and earnings per share (EPS) forecasts were both revised downwards, with analysts seeing grey clouds on the horizon.

Following the downgrade, the current consensus from Tatva Chintan Pharma Chem's three analysts is for revenues of ₹5.8b in 2024 which - if met - would reflect a huge 36% increase on its sales over the past 12 months. Per-share earnings are expected to leap 70% to ₹34.95. Prior to this update, the analysts had been forecasting revenues of ₹6.6b and earnings per share (EPS) of ₹54.73 in 2024. It looks like analyst sentiment has declined substantially, with a substantial drop in revenue estimates and a pretty serious decline to earnings per share numbers as well.

See our latest analysis for Tatva Chintan Pharma Chem

It'll come as no surprise then, to learn that the analysts have cut their price target 16% to ₹2,090. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Tatva Chintan Pharma Chem analyst has a price target of ₹2,526 per share, while the most pessimistic values it at ₹1,635. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. The analysts are definitely expecting Tatva Chintan Pharma Chem's growth to accelerate, with the forecast 36% annualised growth to the end of 2024 ranking favourably alongside historical growth of 17% per annum over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 11% per year. It seems obvious that, while the growth outlook is brighter than the recent past, the analysts also expect Tatva Chintan Pharma Chem to grow faster than the wider industry.

The Bottom Line

The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Tatva Chintan Pharma Chem. While analysts did downgrade their revenue estimates, these forecasts still imply revenues will perform better 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 Tatva Chintan Pharma Chem.

That said, the analysts might have good reason to be negative on Tatva Chintan Pharma Chem, given its declining profit margins. For more information, you can click here to discover this and the 1 other warning sign we've identified.

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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