ICICI Securities expect corporate earnings to resort to double-digit earnings trajectory starting FY26, showcasing ray of hope for investors. However, incorporating revised PAT estimates following Q3FY25 results of Nifty constituents, ICICI Securities Research has revised Nifty earnings downward by 4 per cent.
“Nifty target is now pegged at 27,000 valuing it at 21x PE on FY27E EPS of ₹1,300,” Pankaj Pandey, Research Analyst of ICICI Securities, quoted in index outlook report. The corresponding target for the Sensex is at 90,000, offering healthy high teens upside potential over next 12 months.
The brokerage firm expects corporate earnings to resort as the election-led uncertainty and Union Budget are behind. Report cited that the Budget 2025-26 has aptly tried to balance consumption, capex and consolidation-fiscal.
Taking note of Nifty down 12 per cent from life-time highs and mid & small caps down 15-20 per cent, they believe valuations have become more reasonable and present market provides extremely lucrative opportunities for long term wealth generation.
For Q3FY25, PAT growth at Nifty stood steady 8 per cent y-o-y against expectations of low double-digit growth. The report emphasised that earnings were cushioned by the financial sector amidst muted show by the manufacturing sub-segment.
Sectoral front
ICICI Securities added in its report that key sectors like capital goods and pharma witnessed an upgrade while metals & mining and FMCG space witnessed a downgrade with aggregate forward Nifty earnings declining low single digit.
On banking sector, report emphasised that large private banks, PSBs and NBFCs with secured portfolio have fared well, while mid-sized private banks and NBFCs with unsecured exposure witnessed volatility in terms of asset quality and thus earnings.
For oil & gas space, the brokerage acknowledged that earnings recovered amidst healthy core GRM’s and marketing margins partially impacted by lower recoveries in the LPG segment.
Pertaining to auto sector with recorded steady results during the quarter, ICICI Securities report noted that rise in EV sales at Bajaj auto, gain in tractor market share for M&M while JLR turnaround at Tata motors as some key highlights. However, Lumax Auto Technologies is its top pick.
In addition, the brokerage favoured Bank of Baroda, Persistent Systems, Tata Consumer Products, Jindal Steel and Power, Va Tech Wabag, Piramal Pharma, JK Cement, and Titan Company as its top picks across segments.
