Domestic brokerage Prabhudas Lilladher sets 12-month Nifty target 22,584

"Nifty is not in a bubble zone as it is trading at a 17.2 per cent discount to the 10-year average which provides comfort," said Amnish Aggarwal, head of research at Prabhudas Lilladher

Benchmark index Nifty may hit a target of 22,584 in the next 12 months, implying a 14 per cent upside from the current level, domestic brokerage Prabhudas Lilladher said on Wednesday.

It has arrived at the price target by assigning a price-to-earnings (P/E) multiple of 17.3 times—15 per cent discount to a 10-year average P/E of 20.4 times.

“Nifty is not in a bubble zone as it is trading at 17.2 per cent discount to the 10-year average which provides comfort,” said Amnish Aggarwal, Head of Research, Prabhudas Lilladher.

“Odds are evenly balanced as headwinds emanating from firm US interest rates, El Nino impact on crops and inflation, volatile crude and geopolitical uncertainty still abound,” he added.

 

The brokerage says state election results could dictate market momentum in the run-up to next year’s Lok Sabha polls.

Prabhudas Lilladher is overweight on auto, banks, IT services, capital goods and healthcare and underweight on metals, cement, consumer, oil & gas and diversified financials.

The brokerage has a bull case target of 24,573 and a bear case target of 19,927. The bear case target values Nifty at a 25 per cent discount to the 10-year average P/E, while the bull case target values it at 7.5 per cent discount.