PL Capital predicts Nifty bull case target at 27,590, flags 23 SMID, largecap stocks as high conviction picks

Even as macroeconomic uncertainty and world commerce tensions cloud near-term market sentiment, main brokerage Prabhudas Lilladher Capital (PL Capital) stays optimistic in regards to the long-term prospects of Indian equities. In its newest market outlook, the brokerage has outlined a bull case target of 27,590 for the Nifty.

It tasks a possible upside situation if valuations revert to the long-term common of 18.9x P/E, utilized to its FY27 EPS estimate of Rs 1,460.

This bullish case marks an upward revision from PL Capital’s earlier projection of 27,041, pushed by the expectation of sectoral resilience, continued coverage assist, and earnings visibility throughout domestic-facing companies.

Main home brokerage agency Prabhudas Lilladher Capital (PL Capital) has revised its 12-month base case target for the Nifty to 25,521, down from 25,689 earlier, citing a cocktail of world and home macroeconomic challenges starting from a protracted U.S.-China tariff battle to weakening home demand and earnings downgrades.

The brokerage now values the Nifty at a 7.5% low cost to its 15-year common price-to-earnings (P/E) ratio of 18.9x, assigning it a a number of of 17.5x based mostly on its March 2027 EPS estimate of Rs 1,460. This new valuation displays a cautious recalibration amid rising indicators of stress in world commerce and macro stability.

Past the bottom case, PL Capital additionally outlined different market outcomes:

(*23*)Base Case: Assuming a 7.5% low cost to the 15-year common P/E of 18.9x, PL Capital values the Nifty at 17.5x with a March 2027 EPS estimate of Rs 1,460, resulting in a 12-month target of 25,521 (revised from 25,689 earlier).

(*23*)Bear Case: A ten% low cost to long-term common valuations implies a possible draw back target of 24,831 (from 24,337 earlier).

In line with PL Capital, the escalating geopolitical tariff battle between america and China has develop into a central danger for world markets. The U.S., in a bid to revive its struggling manufacturing sector, has resorted to reciprocal tariffs. Nonetheless, PL Capital notes that this technique is going down towards the backdrop of a $1.2 trillion U.S. fiscal deficit, a large $36 trillion nationwide debt, and a widening commerce imbalance.

Concurrently, China’s rising technological dominance, evident in breakthroughs such as Deepseek AI and the worldwide growth of its Digital Renminbi, mixed with its strategic partnerships by way of the Belt and Street Initiative (BRI), has begun to undercut U.S. financial affect on the worldwide stage. Because of this, PL Capital sees the present tariff standoff as a strategic standoff unlikely to de-escalate rapidly.

This extended stress is anticipated to dent world provide chains, disrupt capital flows, and weigh on trade-linked sectors effectively into the primary half of FY26. The brokerage estimates that world GDP progress may very well be shaved off by 0.5% resulting from this confrontation, rising foreign money and commodity volatility and weakening export-linked sectors like Indian IT.

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On the home entrance, Indian markets have seen a 3.8% YTD decline, as macroeconomic uncertainty weighs closely on sentiment. FII promoting, mixed with weaker-than-expected home demand and a spate of earnings downgrades, has added to the gloom. PL Capital highlights that Nifty EPS estimates for FY26 and FY27 have been minimize by 6.2% and 5.6%, respectively, since October 2024.

Whereas inflation has cooled- due to a standard monsoon and a pointy drop in meals costs, shopper sentiment stays tepid. Regardless of 50 foundation factors of repo price cuts delivered in two tranches and the announcement of Rs 1,000 billion in tax reduction, non-public consumption has but to choose up meaningfully.

In response to those subdued indicators, the RBI has lowered its FY26 GDP progress estimate by 20 foundation factors, reinforcing a cautious outlook for the yr forward.

On the sectoral entrance, analysts at PL Capital estimate a 5% progress in total gross sales for his or her protection universe, however a slight 0.5% decline in EBITDA and a 2.2% drop in Revenue Earlier than Tax (PBT) spotlight margin pressures and weakening profitability.

Excluding Oil & Fuel, nevertheless, EBITDA and PBT are anticipated to develop by 4.3% and 5.5%, respectively—indicating stronger efficiency in the remainder of the market.

Telecom, AMC, Journey, EMS, Metals, Hospitals, Pharma, and Durables are anticipated to guide in revenue progress, whereas Banks, Constructing Supplies, Logistics, and Oil & Fuel are prone to report PBT declines.

In the meantime, IT, Shopper, Cement, and Capital Items sectors are anticipated to point out solely modest, single-digit PBT progress, reflecting warning amid combined demand and world uncertainties.

With this, PL Capital has highlighted xx stocks throughout the small, mid and largecap house as their prime conviction picks:

Largecap stocks: ABB India, Bharti Airtel, Bharat Electronics, Britannia Industries, Cipla, ICICI Financial institution, InterGlobe Aviation, ITC, Kotak Mahindra Financial institution, Mahindra & Mahindra, Maruti Suzuki, Titan Firm

Small and midcap stocks: Aster DM Healthcare, Astral Ltd., Chalet Lodges, Crompton Greaves Shopper Electricals, Eris Lifesciences, Ingersoll-Rand (India), Indian Railway Catering and Tourism Company, Kaynes Know-how India, KEI Industries, Max Healthcare Institute, Triveni Turbine

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(Disclaimer: Suggestions, strategies, views and opinions given by the specialists are their very own. These don’t signify the views of The Financial Occasions)