Prabhudas Lilladher says Nifty could rise to 28,781; adds 4 stocks as high conviction picks – News Air Insight

Prabhudas Lilladher Capital has raised its 12-month Nifty target to 28,781 from 27,609, valuing the index at 19.2 times its September 2027 EPS of Rs 1,499. The brokerage’s bull and bear case targets stand at 30,220 and 25,903, respectively.

In its latest India Strategy report dated October 10, PL Capital said domestic-oriented sectors are likely to continue outperforming, led by banks, NBFCs, autos, retail, consumer staples, defence, metals, and select durables.

Among high-conviction ideas, PL Capital has added Mahindra & Mahindra, Tata Steel, State Bank of India, Amber Enterprises India, and Latent View Analytics, while dropping Bharti Airtel, Aster DM Healthcare, Crompton Greaves Consumer Electricals, and Ingersoll Rand (India).

The brokerage expects Nifty EPS to grow at a compounded rate of 12.1% over FY25–27, with estimates of Rs 1,229 for FY26, Rs 1,415 for FY27 and a newly introduced FY28 estimate of Rs 1,582. FY26 and FY27 EPS estimates were cut by 1.9% and 2.1%, respectively.

PL Capital noted that the Indian market has remained steady despite Rs 85,000 crore worth of FII selling and global tariff headwinds, supported by normal monsoons, lower interest rates and GST cuts. The implementation of GST 2.0 and the benefits of tax cuts in the FY26 Union Budget are expected to lift consumption.

The report highlights that the government’s capital expenditure rose 43% in the first five months of FY26, while private capex is likely to revive as demand picks up. It also pointed out that the 8th Pay Commission, to be implemented in 2026, will provide an additional trigger to consumption in FY27.“Banks are yet to show pick-up in credit growth, 2H26 is likely to show an improvement as consumer demand recovers and the unsecured/MFI/MSME segment starts recovering from current lows. As the benefits of lower interest rates flow down, NIM compression will make way for margin expansion, which will be positive for banks. Pick-up economic activity will benefit NBFCs with higher disbursements and margins,” the brokerage said in a note.For the September quarter, PL Capital expects sales to grow 9.7%, EBITDA by 11.2% and PBT by 9.9% for its coverage universe. Cement, metals, and oil & gas are projected to lead with strong earnings growth, while banks, HFCs, and media may see profit declines.

Within its model portfolio, the brokerage has increased weights in banks, NBFCs, autos, consumers, and metals, while trimming allocations in capital goods, healthcare, and oil & gas. “

PL Capital’s model portfolio has outperformed the Nifty by 23.5% since November 2018, by 1.3% since April 2024, and by 0.3% since its previous report. The company increased its weight in Eicher Motors, SBI, Britannia Industries, Hindustan Aeronautics, Bajaj Finance, and Chola Investment.

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Lastly, it added that 2QFY26 numbers will be volatile due to GST transition and trade de-stocking in many industries. We expect strong demand trends in consumer staples, durables, apparel, footwear etc., in the coming quarters. Auto has seen a big reset in GST rates and the start of the festival season has been strong; it is expected that strong growth in demand will sustain for both PV and 2W.

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