Shareholders might have noticed that CEAT Limited (NSE:CEATLTD) filed its first-quarter result this time last week. The early response was not positive, with shares down 8.2% to ₹3,550 in the past week. Statutory earnings per share fell badly short of expectations, coming in at ₹1.07, some 95% below analyst forecasts, although revenues were okay, approximately in line with analyst estimates at ₹43b. 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. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, the current consensus from CEAT's 17 analysts is for revenues of ₹181.3b in 2027. This would reflect a decent 10% increase on its revenue over the past 12 months. Statutory earnings per share are forecast to shrink 4.1% to ₹140 in the same period. Before this earnings report, the analysts had been forecasting revenues of ₹184.3b and earnings per share (EPS) of ₹153 in 2027. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
See our latest analysis for CEAT
The consensus price target held steady at ₹3,917, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on CEAT, with the most bullish analyst valuing it at ₹4,715 and the most bearish at ₹3,200 per share. 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 CEAT shareholders.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We can infer from the latest estimates that forecasts expect a continuation of CEAT'shistorical trends, as the 14% annualised revenue growth to the end of 2027 is roughly in line with the 12% annual growth over the past five years. Compare this with the broader industry, which analyst estimates (in aggregate) suggest will see revenues grow 11% annually. So although CEAT is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for CEAT. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at ₹3,917, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on CEAT. Long-term earnings power is much more important than next year's profits. We have estimates - from multiple CEAT analysts - going out to 2029, and you can see them free on our platform here.
That said, it's still necessary to consider the ever-present spectre of investment risk. We've identified 2 warning signs with CEAT , and understanding these should be part of your investment process.
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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.