According to Topline Securities’ latest strategy report, the KSE-100 index is projected to surpass 87,000 by December 2024 and 106,000 by June 2025.
This forecast indicates an 18% increase by December 2024 and a 45% increase by June 2025 from the current index level. The report attributes this growth to Pakistan’s successful completion of a $3 billion stand-by agreement with the IMF and the initiation of talks for a new IMF program.
It anticipates the forward PE to rise to 4.6x by June 2025, leading to the KSE-100 index target of 106,000. Additionally, the report revises the index target for December 2024 to 87,000 from the previous target of 75,000.
The report also predicts real GDP growth in the range of 3.5-4.0% for FY25 and expects inflation to average between 13.0-13.5% during the same period. These estimates include various factors such as hikes in power tariff, rent, wheat prices, fuel prices, and gas tariffs.
Considering the inflation assumptions, the brokerage house anticipates interest rate cuts of 500-600bps by June 2025, with a real interest rate assumption of 300-400bps.
Sector-wise, the report suggests that companies/sectors affected by high leverage, pharmaceutical deregulation, lower inflation, and circular debt resolution will attract investor attention over the next 12 months.
