Bajaj AMC sees BSE 500 earnings up 17% in FY27 as valuations reset

Equity market valuations reset as earnings momentum builds: Report

New Delhi, Oct 24

The report from Bajaj Asset Management forecasted earnings growth at 16 per cent for large caps, 19 per cent for mid‑caps and 28 per cent for small caps.

Indian equity valuations have cooled from September 2024 levels. The Nifty 50's 12-month forward price-to-earnings (P/E) multiple fell 31 per cent, from 24.8-fold to 17.2-fold by September 2026, the report noted.

The Nifty Midcap 150 declined 36 per cent, from 35.6x to 22.8-fold, while the Nifty Small cap 250 eased 7 per cent, from 25-fold to 23.2-fold.

It highlighted banking and financial services sectors as supported by broadening credit growth and stable asset quality, while healthcare and power equipment showed structural demand drivers. Information technology faces subdued demand visibility, global policy uncertainty, and potential AI-led disruption warrant caution.

The report warned that global uncertainties and elevated crude oil prices could keep markets volatile in the near term.

India's market capitalisation‑to‑GDP ratio was estimated at 122 per cent for fiscal 2027, down from a September 2024 peak of 150 per cent, the report said. "Valuation multiples have eased from recent highs, but the market capitalisation-to-GDP ratio remains elevated. Sustained earnings growth will be important for market performance ahead," said Sorbh Gupta, Head - Equity, Bajaj AMC.

The report also highlighted the gap between prices and earnings expectations as the Nifty 50 was down 8.09 per cent year-on-year in September 2026, even as its forward 12-month earnings per share (EPS) estimate rose 9.62 per cent.

Large-cap earnings growth rose to 23 per cent in Q1FY27 from 10 per cent in Q4FY26, while mid-cap earnings grew 23 per cent. Nifty 50 profits increased 19 per cent year-on-year, with commodity and telecom companies contributing around 60 per cent of incremental profits.

— IANS