Domestic brokerage Prabhudas Lilladher ups Nifty target to 26,398

Domestic brokerage Prabhudas Lilladher (PL) has upped its 12-month forward target for the benchmark Nifty to 26,398 from 25,816 a month ago.

“As a base case scenario, PL values Nifty at 3 per cent discount to 15-year average price-to-earnings multiple of 18.6x. With March 2026 earnings per share (EPS) of Rs 1,417, we arrive at a 12-month target of 26,398,” the brokerage said in a release.

Currently, the Nifty at 18.5x one-year forward EPS, which is at 3.6 per cent discount to 15-year average of 19.2x. PL said in a bear case scenario, the index could trade at a 10 per cent discount to the long-term average P/E at 24,493. Meanwhile the bull case scenario is Nifty trading at a 5 per cent premium to its 15-year average P/E at 20x to trade at 28,575. The 50-share index last closed at 24,801.

 

Some of the tailwinds identified by the brokerage are a normal monsoon and stable global commodity prices helping tame inflation and boost rural demand. Also, hopes of interest rate cuts later in the year.

When it comes to the upcoming budget, PL expects the government to renew its focus on infrastructure and capital expenditure, rural development, and support for the lower-income segment to help further stimulate the economy.

The sectors expected to do well as per PL are capital goods, infrastructure, logistics/ports, EMS, hospitals, tourism, auto, new energy, e-commerce, and telecom. Normal monsoons and potential concessions for the rural and middle classes are expected to revive demand in sectors such as FMCG, durables, auto, retail, and building materials, it further said.