After a phase of elevated valuations, Indian equities are now trading at more reasonable levels, even as the long-term structural growth story remains firmly intact, according to a report by Emkay Global Financial Services.
The benchmark Nifty 50 is currently trading at a price-to-earnings (P/E) multiple of around 20.2 times, significantly lower than its one-year median of 22.3x and long-term average of about 23.5x, indicating a correction to fair value territory.
This moderation in valuations comes after months of market consolidation and earnings catch-up, making Indian equities relatively more attractive compared to their recent past.
Valuations now in line with global peers
The report highlights that India’s valuation premium remains justified, but is no longer excessive.
At current levels:
Nifty trades at 20.2x P/E
Compared to NASDAQ (33x)
Dow Jones (20x)
DAX (16.5x)
Nikkei (22x)
This places Indian markets broadly in line with global peers, while still reflecting a modest premium supported by stronger growth prospects.
” Indian equities are currently trading at fair valuations relative to global peers, with the Nifty 50 at approximately 20x P/E—below its recent historical averages. The valuation comfort is supported by robust macroeconomic fundamentals, including expected GDP growth of 7.3–7.5% and steady earnings expansion,” said the report.
According to the report, the Nifty 50 is now trading at around 20 times earnings, lower than its usual range of 22–23 times
In simple terms:
-
Stocks are no longer overpriced -
But they’re not exactly cheap either -
So what changed?
Earlier, markets had run up faster than company earnings. Now, prices have cooled down a bit, while earnings have caught up.
That’s why valuations now look more “fair.”
What supports India’s valuation premium
Despite global volatility, the report points to several structural factors underpinning India’s equity markets:
-
GDP growth of 7.3–7.5% expected in FY26 -
Corporate earnings projected to grow in low-to-mid teens CAGR over FY26–FY28 -
Stable policy and political environment -
Strong domestic inflows through SIPs, EPFO and insurance
These factors continue to make India one of the most attractive long-term equity markets globally.All of the above factors means India still deserves a slight premium.
A new investment cycle is emerging
Beyond valuations, the report underscores that India is entering a structural investment cycle, driven by three key sectors:
Manufacturing
Infrastructure
Energy
This “triad” is expected to reinforce each other, creating sustained growth over the next decade.
“India is at the cusp of a new investment upcycle, driven by healthier corporate balance sheets, policy support, and a more pragmatic approach from promoters. There is a clear pivot towards sectors like manufacturing, infrastructure, and energy, where rising capex and global realignment are creating long- term opportunities. Promoters today are more open to partnering with institutional capital to accelerate growth and build scale. With capital available but increasingly selective, businesses with strong governance and execution capabilities will stand out. We see this as a defining phase for sustained, investment-led growth in India.” said Yatin Singh, CEO, Investment Banking, Emkay Global Financial Services.
India’s manufacturing push is being supported by:
-
China+1 supply chain diversification -
Production-linked incentive (PLI) schemes -
Export competitiveness
Infrastructure investments—spanning roads, railways, ports and digital infrastructure—are being backed by strong government spending and increasing private participation.
At the same time, the energy sector is seeing a transition-led capex cycle, with investments flowing into renewables, grid infrastructure, and storage solutions.
Together, these sectors are expected to drive long-duration, capex-led growth, marking a shift from earlier credit-driven cycles.
Corporate India’s mindset shift
A notable change highlighted in the report is the shift in promoter behaviour.
Earlier, Indian promoters were reluctant to dilute ownership, often limiting growth opportunities. Today, there is a clear shift toward:
Accepting external capital
Prioritising scale and market share
Embracing professional management
This transition is enabling companies to pursue larger growth opportunities and improve capital efficiency, which in turn supports valuation expansion over time.
New opportunities across sectors
The report identifies several sectors likely to attract capital in the coming years:
Electric vehicles and auto transition
Electronics and semiconductor manufacturing
Renewable energy
Real estate and commercial infrastructure
Agro and food processing
For instance, India’s real estate market alone is projected to grow from $0.3 trillion in 2025 to $1 trillion by 2030, and potentially $5 trillion by 2047, highlighting the scale of opportunity.
“Modern warfare is increasingly technology-led, with innovation becoming a critical differentiator in defence capabilities. As this evolution accelerates, we expect advanced technologies to play a central role in shaping India’s defence manufacturing ecosystem. This shift presents a significant opportunity for the sector to scale, innovate, and become globally competitive.” added Singh.
Structural hotspots for deals & capital raising
Emkay Global highlights five key sectors attracting significant deal activity and capital deployment:
Automobiles and EVs: Transition from ICEs to EVs and CNG-based vehicles, supported by FAME and PLI schemes. Tax reforms allowing 100% FDI via automatic route are further boosting
investment.
Electronics and Semiconductors: PLI and the SEMICON India Program are driving growth. Leading global players including Micron Technologies, Foxconn, Samsung, and Tata Group are
establishing manufacturing facilities in India.
Renewable Energy: India reached 106 GW installed RE capacity in FY25, with an annual tendering target of 50 GW. The government’s target of ~300 GW by CY30 places India at a
watershed moment in its energy transition.
Real Estate: India’s real estate market is projected to grow from $0.3 trillion in 2025 to $1 trillion by 2030 and $5 trillion by 2047. Commercial real estate, particularly office space, continues to attract significant long-term institutional capital.
• Agro and Food Processing: Supported by PLI for the Food Processing Industry, Pradhan Mantri Kisan Sampada Yojana, and 100% FDI via both automatic and government approval routes
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