Emkay cuts Nifty target to 25,000 but says earnings downgrades not alarming

Brokerage Emkay Global has slashed its Nifty target by 4% to 25,000, citing a weak earnings season marked by sluggish consumption and deteriorating cash flows. However, the brokerage emphasised that while earnings trends have softened, they do not signal a cause for alarm.

Despite the 10% correction in the benchmark Nifty index since September 27, Emkay expects markets to “mark time” in the immediate future. It maintains an overweight stance on IT and energy sectors while underweighting financials and staples, reflecting its unchanged sectoral preferences.

After the recent correction, the benchmark Nifty has risen nearly 4% over the past two trading sessions. The Nifty 50 index rose over 1.45% on Monday, with 49 of the 50 stocks gaining during the opening session.


Nifty made a remarkable recovery last week, too, reversing its earlier breakdown and breaking out above the crucial 200-day exponential moving average (200-DEMA).

Earnings downgrades during the season were not significant, with the Nifty EPS seeing a 2.5% cut since September 30. The percentage of companies facing more than a 5% cut in FY25 EPS held steady at 26%, compared to 28% in the first half of FY25, the brokerage said.

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However, Emkay flagged the absence of upgrades as a negative, with only 2% of companies seeing EPS upgrades in Q3 so far, compared to 24% in the first half. The projected FY25 EPS growth now stands at a modest 8%.

“The weak earnings growth and worsening cash flows warrant a cut in our target P/E. We are not unduly alarmed though, as we see some of the factors — weak consumption, slow government capex — as temporary, and expect a bounce-back in FY26,” said Emkay Global.

Emkay justified the downward revision of its Nifty target by reducing its target price-to-earnings ratio (P/E) to 20.4 times for December 2025, down from September 2025. This still implies a 3% premium to the five-year average P/E, supported by India’s long-term growth prospects and macro-financial stability.

While near-term challenges persist, the brokerage expressed optimism about a potential recovery in FY26, driven by improving consumption demand and normalized cash flows.

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