Nifty Earnings Per Share (EPS) has seen an increase of 0.5 per cent for FY21, while FY22 and FY23 EPS has seen upgrades of 0.3 per cent and 1.1 per cent respectively. Nifty EPS is estimated at Rs 491.5, Rs 652.2, and Rs 765.5 for FY21, FY22, and FY23 respectively. Based on this, the estimate is a NIFTY EPS growth of 11.7 per cent in FY21, 32.7 per cent in FY22, and 17.4 per cent for FY23. Their estimates are higher than consensus by 2.7 per cent for FY21, 1.4 per cent and 1.2 per cent for FY22 and FY23 respectively. Nifty is currently trading at 21.8 times its 1-year forward EPS which shows 9.8 per cent premium to 10-year average of 19.9.
Based on the above-expected earnings level, as the base case, PL said, “We value Nifty FY23 EPS of Rs 765.5 at 5 per cent premium to 10-year average PE of 19.9 and arrive at March 22 target of 16075 for Nifty. Under the bull case scenario, although Nifty has traded at 27x recently, we continue to take an earlier peak of 25x and arrive at a bull case target of 19,137, as against our earlier target of 18,921 earlier”.
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