Stock Market Today: According to ICICI Securities, Reliance Industries, HDFC Bank, and Bajaj Finance are among the companies that could have a $1 trillion market value by 2032.
According to estimates made by ICICI Securities, India may produce its first market capitalization of one trillion US dollars (m-cap) by 2032. ICICI Securities lists Reliance Industries, HDFC Bank, and Bajaj Finance as some of the leading candidates to surpass $1 trillion in market value by 2032.
Any business that reaches a $1 trillion market value is anticipated to reach peak corporate profitability (a “net profit to GDP” ratio of 7%) in the listed sector, propelled by a slow progression towards peak GDP growth of 9%. This is the basis of the macro framework.
According to Mint, the stock of HDFC Bank is a strong candidate to attain a market cap of $1 trillion due to its hurdle rate of 25.5% compared to its historical profit growth trajectory of 20%, according to analysts at ICICI Securities. There is also room for a review of the firm’s valuation.
If its longer-term profit growth trajectory accelerates to 21%, ICICI Securities analysts predict that Reliance Industries’ market value might reach $1 trillion.
In the event that there is no P/E re-rating, Bajaj Finance’s market capitalization will exceed $1 trillion if it continues to grow at its historical rate of 35–40% over the following ten years.
ICICI Securities predicts that the net profit to GDP ratio would be the main motivator.
Their broad projections for reaching a $1 trillion market capitalization by 2032 consist of:
Over the last twenty years, the largest stock’s mcap to aggregate mcap ratio has maintained at an average of approximately 5.8% (max. 10%/min. 3.6%).
Continued expansion in the “net profit to GDP” ratio will see it reach 7% by 2032, while real GDP growth will gradually go up from 7% in FY24 to approach the 9% peak of the previous cycle. They make no assumptions about the growth of market valuations from their current levels, but they do expect that corporate profits will expand faster than the GDP, which will lead to Mcap/GDP reaching 160% without a rise in price relative to earnings.
The cycle of capital expenditures (real estate, manufacturing, infrastructure, etc.), leveraging, and discretionary spending is expected to propel GDP growth.
Two more fundamental presumptions of ICICI Securities are that the price-to-earnings ratios will not be related from their current levels and that the market cap ratio of the largest stock to the total market cap will maintain a long-term average of 5-6%.
