New Delhi [India], February 2 : Indian equity markets continue to offer an attractive investment opportunity, with the Nifty 50 expected to witness strong earnings growth over the next few years, according to a report by Aditya Birla Capital.
The report projected that the Nifty 50's earnings per share (EPS) will grow at a compound annual growth rate (CAGR) of approximately 13 per cent over the financial years 2025-2027.
It said, "We anticipate NIFTY50 EPS to grow at a CAGR of approx. 13 per cent over FY25-27. At its current valuation of 17.3x FY26 PE, NIFTY50 is trading at approximately 10 per cent discount to its 10Y historical average, presenting an attractive opportunity."
It also highlighted that currently, the index is trading at 17.3 times its estimated earnings for FY26, which is nearly 10 per cent lower than its 10-year historical average. This suggests that Indian equities remain reasonably priced despite recent market movements.
The report added that India's economic growth remains robust, driven by a stable central government and strong corporate balance sheets. The country's fiscal deficit is on a declining trend, reinforcing confidence in economic stability.
Given this strong backdrop, Indian markets warrant a higher valuation premium compared to other global economies.
Discussing the recently announced FY26 Budget, the report noted that it focuses on key areas such as agriculture, employment, skill development, exports, and MSMEs.
A strategic adjustment in import tariffs has been introduced to counter potential trade policies from the US, particularly under a possible Trump administration.
One of the budget's major highlights is its push to boost consumption. The government has revised direct tax slabs, which will increase disposable income and support urban demand. Additionally, rural development initiatives and expectations of a favourable monsoon are likely to further strengthen rural consumption.
Overall, the report noted that the budget was "neutral to positive," giving it a rating of 7 out of 10. The report suggested that while challenges remain, the long-term growth story of Indian equities remains intact, presenting a promising opportunity for investors.
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