>INDIA STRATEGY: Sensex@20,500 by FY13 end (CENTRUM)

We estimate Sensex to post an EPS of Rs. 1416 for FY14E (15% growth over FY13E)  Applying a target P/E of 14.5x (inline with long term mean) we get Sensex target of 20500 for FY13 end, although this can be achieved earlier (by Dec 2012) if government reforms agenda takes off

The P/E for Sensex has seen high correlation with the Nominal GDP growth. Hence we believe that the target multiple applied for Sensex is appropriate considering the Nominal GDP growth expectations of close to 14%

Composition of incremental index earnings shows that the majority of earnings come from Financials, Materials and Auto sectors; softening interest rate cycle should aid recovery in the Financials and Auto sectors while a low base of FY13 would help sectors like Materials to post a good growth in FY14.c


To read report in detail: INDIA STRATEGY