Last Updated:
India’s growth narrative is entering a decisive phase as policy clarity, landmark trade agreements and infrastructure spending converge to support expansion, says PL Capital.
PL Capital’s base case assumes the index trades at 18.3x — a 5% discount to long-term averages — on December 2027 EPS of 1,525. This results in a 12-month target of 27,958.
Nifty Prediction: Brokerage firm PL Capital has projected a 12-month Nifty target of 27,958, citing improving earnings visibility, trade breakthroughs and sustained capital expenditure as key drivers of the next market upcycle.
In its latest India Strategy Report released on February 25, the firm said India’s growth narrative is entering a decisive phase as policy clarity, landmark trade agreements and infrastructure spending converge to support expansion.
Earnings Reset, Not Reversal
According to PL Capital, the Nifty has traded within a narrow 5-6% range over the past nine months amid global geopolitical tensions, tariff disruptions and moderation in earnings per share (EPS) estimates for FY26 and FY27.
EPS forecasts for FY26 and FY27 were trimmed by about 9-9.5%, with FY26 EPS growth now seen at 3.8%. However, the brokerage expects earnings growth to accelerate over the medium term, projecting a 16.3% compound annual growth rate (CAGR) between FY26 and FY28.
Corporate fundamentals remain resilient. For the coverage universe, sales, EBITDA and profit after tax grew 9.9%, 16.4% and 16.7% year-on-year, respectively, despite EPS downgrades.
The brokerage described the current phase as a “reset” rather than a structural slowdown.
Valuation Math Behind 27,958 Target
The Nifty currently trades at 19.1 times one-year forward earnings, broadly in line with its 15-year average.
PL Capital’s base case assumes the index trades at 18.3x — a 5% discount to long-term averages — on December 2027 EPS of 1,525. This results in a 12-month target of 27,958.
In a bullish scenario, a 20x multiple implies upside toward 30,497, while a bear-case valuation suggests 26,486.
Trade Deals Strengthen External Outlook
The brokerage highlighted recent trade progress, including the India-EU Free Trade Agreement, which provides preferential access across 97% of tariff lines covering 99.5% of trade value.
Labour-intensive sectors such as textiles, apparel, marine products, leather, gems and jewellery, chemicals and machinery are expected to benefit from duty elimination. Services sectors, including IT, financial services and telecom, also stand to gain from improved regulatory alignment.
Parallelly, easing of punitive tariffs under the interim trade framework with the United States has reduced uncertainty for exporters in sectors such as auto components, aircraft parts, textiles and industrial goods.
Capex Push Remains Key Driver
Domestically, the Union Budget 2026-27 continues to prioritise capital formation. Central capex has risen 12%, while overall capex including state grants is up 22%, even as the fiscal deficit is guided at 4.3%.
Focus areas include defence manufacturing, renewable energy, data centres, semiconductor fabrication, aerospace and specialty chemicals.
Sectoral View
PL Capital remains constructive on banks, diversified financials, healthcare, consumer, automobiles and capital goods/defence. It maintains a relatively cautious stance on IT services and commodities.
Amnish Aggarwal, Director Research, Institutional Equities, PL Capital said, “India is transitioning from a cyclical recovery phase to a structurally stronger growth trajectory. What differentiates this cycle is the depth of policy execution, rising private sector participation and the scale of opportunity emerging across manufacturing, digital infrastructure and domestic consumption. Markets may have paused, but the underlying economic engine continues to gain strength. As capital formation accelerates and productivity enhancements play out, we believe Indian equities are entering the early stages of a multi-year compounding cycle.”
Outlook
While global rate movements and external risks remain factors to watch, the brokerage believes improved export access, easing tariff pressures and steady earnings recovery position Indian equities for the next expansion phase.
With earnings expected to grow at a 16% CAGR over the next two years and valuations near historical averages, PL Capital sees room for the Nifty to approach 27,958 over the next 12 months.
Click here to add News18 as your preferred news source on Google.
Follow News18 on Google. Join the fun, play games on News18. Stay updated with all the latest business news, including market trends, stock updates, tax, IPO, banking finance, real estate, savings and investments. To Get in-depth analysis, expert opinions, and real-time updates. Also Download the News18 App to stay updated.
February 25, 2026, 14:24 IST
Read More
