ICICI Sec sees Sensex at 90,000; double-digit earnings growth FY26 onwards

Lighting a ray of hope for investors amid gloom, analysts at ICICI Securities said in a recent note that they expect the corporate earnings to rebound to double-digits starting fiscal year 2025-26 (FY26) with election-led uncertainty over and growth-oriented Union Budget in place. This, they feel, will wake up the comatose Bull and take the Sensex and the Nifty to new highs in the next 12 months.

 

With the Nifty 50 down around 12 per cent from life-time highs, and mid-and small-caps down around 15-20 per cent, analysts at ICICI Securities said, valuations have become more reasonable and the present market provides extremely lucrative opportunities for long-term wealth generation. 

 

  Global and domestic interest rate cycle, they said, has started its downward trajectory and should support equity valuations going forward.  

“On the Nifty earnings per share (EPS) front, post the December 2024 quarter (Q3-FY25), incorporating revised profit after tax (PAT) estimates for Nifty 50 constituents, we are seeing around a 4 per cent earnings downgrade. Keeping the price-earnings (PE) multiple intact, our (Nifty) index target gets revised to 27,000 levels i.e. nearly 21x PE on FY27 EPS of Rs 1,300. Corresponding Sensex target is pegged at around 90,000 levels (up around 19.5 per cent from the current levels), offering healthy high teens upside potential over next 12 months,” wrote Pankaj Pandey, head of research at ICICI Securities in a recent note. 

ICICI Securities sees Sensex at 90,000

 

At the bourses, meanwhile, the BSE Sensex has lost nearly 12 per cent from its 52-week high level of 85571.85 hit on September 27, 2024. The fall in select constituents, however, has been sharper. Asian Paints and Tata Motors have been hit the hardest with a fall of 32 per cent and 31 per cent, respectively.

 

IndusInd Bank, NTPC, Power Grid Corporation, Hindustan Unilever (HUL), Adani Ports and Special Economic Zone, ITC, Nestle India and Axis Bank are also among the top losers that have lost up to 28 per cent since then, ACE Equity data shows.

 

Growth challenge

 

That said, while India’s macroeconomic fundamentals remain strong, analysts believe that there are challenges to economic growth back home. 

 

The downward revision in gross domestic product (GDP) forecasts in the Economic Survey, said analysts at IDBI Capital, highlights the fact that household consumption is likely to take time to recover, while export growth is also likely to remain muted due to an unstable global environment.  

 

And the data does support this argument to some extent.

 

India’s core sector growth slowed to 4 per cent in December 2024, down from 5.1 per cent in December 2023 and 4.4 per cent in November 2024.

 

“We believe large-cap valuations are now at a more reasonable level, though there is still considerable froth in the mid-and small-caps, despite the recent drop in indices. While corporate earnings in India should bottom out over the next one-two quarters, the bigger risk to the market could stem from rising global trade conflicts, or any potential tariffs directly imposed on India by the US,” wrote Pravin Bokade and Shubham Shelar of IDBI Capital in a recent market strategy note.