Source: The Economics Times
Mumbai, August 26, 2025 – Brokerage firm Prabhudas Lilladher Capital (PL Capital) is projecting a Nifty 50 index level of 27,609 within 12 months. The firm cites rising consumer demand, tax cuts, declining inflation, and easier credit as the key enablers of India’s growth.
Market outlook
In its most recent report on India Strategy, PL Capital assigned a valuation of 19.1 times one-year forward earnings to the Nifty index, which is aligned with its long-term average. The Firm estimates Nifty EPS to be ₹1,254 for FY26 and ₹1,445 for FY27, implying an annual growth rate of 13.2% over FY25-27.
However, the brokerage reduced its previous estimates by a small margin, adjusting FY26 earnings lower by 1.4% and FY27 by 0.4% due to risks associated with tariffs in the U.S. and tensions globally.
Best stocks to buy
PL Capital’s recommended large-cap stocks include Adani Ports, Apollo Hospitals, Bharti Airtel, Britannia, Hindustan Aeronautics, ICICI Bank, ITC, Larsen & Toubro, Lupin, and Titan.
In the mid- and small-cap basket, PL Capital likes Aster DM Healthcare, Crompton Greaves Consumer Electricals, DOMS Industries, Eris Lifesciences, Ingersoll-Rand India, KEI Industries, Samhi Hotels, and Voltamp Transformers.
The brokerage added Adani Ports to its model portfolio, saying it is a strong play on trade growth in India. It also selected Britannia, L&T, DOMS Industries, Voltamp Transformers, and Eris Lifesciences as high-conviction ideas.
Sector outlook
The company remains upbeat on banks, healthcare, consumer, telecom, autos, and capital goods combined, and was cautious on IT services and commodities. It noted that defence, infrastructure, electronics manufacturing, hospitals, and power transmission are all still important sectors, but may not see large re-ratings.
Growth catalysts
PL Capital expects domestic demand to be the principal growth driver. The main reasons include:
- ₹1 trillion in tax cuts expected in FY26.
- 100 bps of rate cuts by the Reserve Bank of India, reducing loan prices.
- Falling inflation and normal monsoons are driving rural demand.
GST 2.0 reforms expected to downgrade most goods to the lower tax slabs, leading to cheaper cars, consumer durables, food items and medicines.
“Conditions seem ideal for pickup in domestic demand as the current festive season is expected to gain from benefits of tax cuts, lower inflation and normal monsoons,” said Amnish Aggarwal, head of research at Prabhudas Lilladher.
Risks
The brokerage cautioned that U.S. tariffs and geopolitical risks could further dampen growth. It estimated these could contribute 30–50 basis points of reduction to India’s GDP growth in FY26. Export-driven sectors such as textiles, gems and jewellery, and marine products could see job losses and increasing pressure on profits.
