Nifty can rally to 30,089 in Prabhudas Lilladher’s bull case scenario, adds 3 stocks to model portfolio

Domestic brokerage firm Prabhudas Lilladher, in its bull-case scenario, expects Nifty to rally 24% to 30,089 over the next 12 months. The brokerage remains constructive on domestic-oriented sectors such as banks, NBFCs, capital goods, defence, power utilities, telecom, jewellery, metals, hospitals and pharma, as well as consumer durables. However, it has retained a cautious stance on IT services, export-driven businesses, cement, chemicals and oil and gas.

Reflecting this view, the brokerage has increased its allocation to banks, capital goods, metals and telecom, while turning underweight on consumer and auto stocks. It cited the second-order impact of elevated crude prices and inflation, which it believes is yet to be fully reflected in the economy.

In its model portfolio, Prabhudas Lilladher has added Polycab India, JSW Steel and Fortis Healthcare, while exiting Apollo Hospitals Enterprise. It has also increased weights in HDFC Bank, Kotak Mahindra Bank, Larsen & Toubro, Siemens, Titan Company and Bharti Airtel, while trimming exposure to Mahindra & Mahindra, Eicher Motors, Ultratech Cement, Pidilite Industries, Hindustan Unilever and Adani Ports & SEZ.


The brokerage noted that demand trends remain stable for now, but flagged risks from rising inflation and a potential El Niño impact in the coming quarters. It also highlighted that Q4FY26 earnings do not yet fully reflect the likely impact of higher crude prices, global supply chain disruptions and weather-related uncertainties.

Looking ahead, it expects strong growth across capital goods, telecom, EMS, select staples, NBFCs, AMCs, hospitals, power T&D and defence. In contrast, it believes auto growth is nearing its peak, with future trends likely to be influenced by movements in petrol and diesel prices.

On valuations, Nifty is currently trading at a 12% discount to its 15-year average price-to-earnings multiple, with levels approaching those seen during GST 1.0 and the demonetisation phase. While a breach of recent lows appears unlikely, the brokerage cautioned that a sharp deterioration in the geopolitical environment could change this outlook.

Earnings estimates have seen marginal revisions, with EPS changes of 0.2%, -1% and -1.6% for FY26, FY27 and FY28, respectively. The brokerage expects 4% earnings growth in FY26 and a 15% CAGR over FY26–28, taking EPS to Rs 1,172, Rs 1,356 and Rs 1,551 for FY26, FY27 and FY28, respectively.

At present, Nifty trades at 17 times one-year forward earnings, a 12.4% discount to its 15-year average PE of 19.4 times. In its base case, the brokerage values the index at a 10% discount to the long-term average, implying a multiple of 17.5 times on FY28 EPS of Rs 1,551, leading to a revised 12-month target of 27,080, compared with 27,958 earlier.

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On the macro front, Prabhudas Lilladher believes that persistently high inflation, the potential impact of El Niño on agricultural output and the ongoing Gulf war could weigh on GDP growth. It expects inflation to rise above 5% over the next three to six months. Street estimates for FY27 GDP growth have already been lowered to around 6.5%, and a further downgrade to 6% or below cannot be ruled out if the conflict in the Gulf region prolongs.

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In a bear-case scenario, the brokerage said Nifty could trade at valuation levels last seen during the eurozone crisis in 2013, at around 13.5 times PE. This would imply a downside target of 20,939, representing a worst-case outcome under current conditions.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)