Nifty 50 target for March 2025 at 24,800, says ICICI Securities (2024)

The Nifty 50 index expanded 31% from the lows of March 2023, as against a trailing earnings expansion of around 18% during the same time, thereby resulting in valuations expanding from a reasonable 17.5x to an elevated 20x on a forward earnings basis, analysts at ICICI Securities said.

The rally in the broader market was even higher compared to their earnings expansion with midcaps, smallcaps and microcap stocks giving returns of 62%, 73% and 100%, respectively, since March 2023 lows.

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Meanwhile, analysts believe the positive surprise in India’s GDP growth for the December quarter at 8.4% sets the stage for an earnings upgrade.

“Driven by the ‘investment rate’, real GDP growth for Q3FY24 was much higher (8.4% YoY) than consensus estimates, thereby resulting in consensus upward revision to FY24 GDP. This could potentially lead to upward earnings revisions – such expectations have begun egging stock prices on, which are already stretched in terms of valuations, thereby thinning the ‘margin of safety’," ICICI Securities’ analysts Vinod Karki and Niraj Karnani said in a report.

They believe upward growth revision is likely to continue to emanate from cyclical and capital intensive space, as it has been for the past one year, thereby resulting in their outperformance.

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Our one-year forward (March 2025) target for Nifty 50 stands at 24,800 and implies a 10% upside against the long-term expected returns of ~14%, analysts said.

Over the past one year, for the largecap space, the FY24/FY25 aggregate earnings forecasts have been revised upwards for the cyclical and capital-intensive sectors while the aggregate earnings of the defensive sector have been downgraded, they noted.

ICICI Securities’ top picks from its coverage universe include Larsen & Toubro (L&T), BHEL, Jindal Steel & Power, Jindal Stainless, Astra Microwave, ONGC, HPCL, GAIL India, Ambuja Cements, Grasim Industries, Archean Chemical, Greenpanel Industries, Delhivery, Cipla, M&M, Balkrishna Industries, Zomato, IndusInd Bank and SBI Life Insurance.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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Published: 12 Mar 2024, 10:52 AM IST