Revenue Beat: Sumitomo Chemical India Limited Beat Analyst Estimates By 13%
Last week, you might have seen that Sumitomo Chemical India Limited (NSE:SUMICHEM) released its first-quarter result to the market. The early response was not positive, with shares down 5.6% to ₹502 in the past week. It was a mildly positive result, with revenues exceeding expectations at ₹11b, while statutory earnings per share (EPS) of ₹10.88 were in line with analyst forecasts. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Following the latest results, Sumitomo Chemical India's nine analysts are now forecasting revenues of ₹35.7b in 2027. This would be a meaningful 10% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to rise 9.3% to ₹12.69. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹35.8b and earnings per share (EPS) of ₹12.42 in 2027. So the consensus seems to have become somewhat more optimistic on Sumitomo Chemical India's earnings potential following these results.
Check out our latest analysis for Sumitomo Chemical India
The consensus price target was unchanged at ₹580, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Sumitomo Chemical India at ₹650 per share, while the most bearish prices it at ₹435. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Sumitomo Chemical India shareholders.
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. It's clear from the latest estimates that Sumitomo Chemical India's rate of growth is expected to accelerate meaningfully, with the forecast 14% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 1.3% p.a. over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 12% per year. 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 here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Sumitomo Chemical India following these results. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as 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.
Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for Sumitomo Chemical India going out to 2029, 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.