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The brokerage values the index at its 15-year average P/E multiple of 19.2x, pegging the September 2027 EPS at 1,515.
PL Capital attributes the surge in the Nifty to “resilient 2Q26 corporate performance, hopes of resolution in tariff row with the USA and rising hopes of domestic demand revival during ongoing festival/wedding season powered by GST rationalisation”.
The NSE Nifty could climb to 29,094 over the next 12 months, driven by resilient corporate earnings, expectations of policy support, and a revival in domestic demand, according to PL Capital’s latest equity outlook. The brokerage values the index at its 15-year average P/E multiple of 19.2x, pegging the September 2027 EPS at 1,515.
Markets Break Out After Long Consolidation
Indian equities have gained around 4% in the past three months, rebounding after a prolonged consolidation phase. PL Capital attributes this move to “resilient 2Q26 corporate performance, hopes of resolution in tariff row with the USA and rising hopes of domestic demand revival during ongoing festival/wedding season powered by GST rationalisation.”
After multiple earnings downgrades since August 2024, the Nifty has finally recorded an estimate upgrade. “NIFTY EPS has broken the trend of EPS downgrades,” the report notes, with earnings now expected to grow at a 13.8% CAGR over FY26-28.
Nifty Valuation and Target Levels
PL Capital has revised its Nifty target levels:
Base case: 29,094 (using 19.2x P/E on Sept 2027 EPS)
Bull case: 30,548 (using 20.2x P/E)
Bear case: 26,184 (10% discount to long-period average P/E)
The brokerage expects Nifty EPS of Rs 1,237 for FY26, Rs 1,427 for FY27, and Rs 1,603 for FY28.
Corporate Earnings: Strong EBIDTA and PAT Growth
Listed companies under PL’s coverage reported 8.1% sales growth, 16.3% EBIDTA growth, and 16.4% PAT growth in Q2.
Excluding BFSI, EBIDTA grew 22.6%, while excluding oil & gas, EBIDTA was up 11.5%.
Sectors such as hospitals, capital goods, cement, EMS, ports, NBFCs and telecom posted strong double-digit sales growth. Commodity segments like cement, metals, and oil & gas saw EBIDTA rise sharply by 58.5%, 33.3% and 34.9%, respectively.
Why Growth May Slow in 2H26
The report cautions that government capital expenditure, a major driver of post-COVID recovery, may not sustain its current pace. While 1H26 capex rose 40%, a 10% YoY decline is possible in the second half due to a high base and fiscal constraints.
According to PL Capital, “Increasing incremental capex allocation looks difficult” because of GST rate rationalisation impact in 2H26, the need for 18–20% direct tax growth to meet FY26 targets (vs 7% growth so far), and an additional Rs 70,000 crore required for fertilizer subsidy.
Domestic Demand to Take the Lead in 2026
Even as government spending could moderate, the brokerage expects consumption-led momentum to drive economic activity. The triggers include potential income tax rate cuts, possible 100 bps interest rate cut, normal monsoons, 12-year low inflation, and GST rate rationalisation, according to the report.
Festival trends already indicate improving demand for autos, electronics and discretionary consumption.
Sector Strategy: Banks, Consumers, Defence in Focus
The model portfolio remains overweight on banks, healthcare, consumer (staples and discretionary), auto, and defence.
It is underweight on IT services and commodities.
PL Capital is also raising weights in NBFCs, insurance and ports, citing domestic demand recovery.
Upgrades, Downgrades and High-Conviction Picks
There were 12 rating upgrades and 8 downgrades this quarter.
Major upgrades include: KEC International, Kalpataru Projects International, Thermax, Jubilant Foodworks, Kaynes Technology, Tata Elxsi, Tata Technologies, HCL Technologies, Shriram Finance, GAIL, and IPCA Labs.
Significant downgrades include: LIC Housing Finance, Ingersoll-Rand, Triveni Turbine, PCBL Chemicals, Hindalco, GSPL, HPCL, and Cipla.
PL Capital has added Max Healthcare Institute, Ajanta Pharma and Fine Organic Industries to its conviction list, replacing Apollo Hospitals, Lupin, Amber Enterprises and Eris Lifesciences.
Outlook: Earnings Momentum May Drive Next Leg of Rally
With Nifty trading at its long-period average valuation of 19.2x forward earnings, the brokerage believes that the market’s upside will depend on sustained earnings delivery and a revival in domestic consumption.
“We value NIFTY at 15-year average PE of 19.2x with Sept27 EPS of 1515 and arrive at a 12-month target of 29,094,” the report reiterates, marking a cautiously optimistic stance for 2026.
Stock Market Today
Snapping the three-day falling streak, benchmark Sensex rebounded by 1,022 points while Nifty reclaimed the 26,000 level on Wednesday on across-the-board buying aided by a rally in global peers amid growing hopes of a US Fed rate cut and fresh foreign fund inflows.
The 30-share BSE Sensex jumped 1,022.50 points or 1.21 per cent to settle at 85,609.51. During the day, it surged 1,057.18 points or 1.24 per cent to 85,644.19.
The 50-share NSE Nifty zoomed 320.50 points or 1.24 per cent to end at 26,205.30, just 10 points shy of its all time closing high. The broader index scaled record intra-day high of 26,277 on September 27, 2024. In intra-day trade, Nifty rallied 330.35 points or 1.27 per cent to 26,215.15.
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h…Read More
Haris is Deputy News Editor (Business) at news18.com. He writes on various issues related to personal finance, markets, economy and companies. Having over a decade of experience in financial journalism, Haris h… Read More
November 26, 2025, 17:31 IST
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