Moaaz Manzoor

Taurus Securities Limited has projected the Karachi Stock Exchange 100 Index (KSE-100 Index) to reach 206,000 points by December 2026, estimating a total return of 30% over the period, as Pakistan’s equity market extends its multi-year upward trajectory.

The benchmark index has already risen around 45% during the current calendar year, standing at 166,678 points on Friday (Nov 28), after touching its highest-ever level of 169,989 points in early October 2025. This strong performance places PSX among the better-performing equity markets globally.

According to Taurus Securities, the rally reflects reduced political and economic uncertainty, continued progress in reforms under the International Monetary Fund program, and monetary easing that has supported liquidity across the market. A relatively stable Pakistani rupee and a rise in domestic investor participation — that have absorbed approximately $360 million in foreign selling since 2023 — have also strengthened market sentiment.

Valuations have shifted notably over the past year. The market has re-rated from a forward price-to-earnings ratio (P/E) of around 6 times to levels now above its 10-year average P/E of 8 times, with expectations that valuations may approach around 9 times. The market capitalization-to-gross domestic product ratio is also trading close to its long-term mean of 15.2%, suggesting that valuations have normalized.

Despite this re-rating, the brokerage notes that Pakistani equities remain deeply discounted compared to regional peers. Pakistan’s price-to-earnings ratio of 7.8 times reflects a 57% discount, while its price-to-book ratio (P/B) of 1.2 times represents a 30% discount to comparable emerging markets.

Taurus Securities derives its 206,000-point target from two equally weighted methodologies: a target price approach valued at 226,507 points, and an earnings growth approach valued at 185,494 points. Based on the current index level of 166,678 points, this implies a 24% price return, with the remaining 6% coming from dividend yield to reach the total return forecast of 30% for calendar year 2026.

In terms of corporate earnings, the brokerage expects the strongest growth in 2026 from oil marketing companies (31% year-on-year), followed by power sector companies (23%), cement producers (15%), fertiliser companies (14%), and automobile companies (14%). Commercial banks, which carry the largest index weight of 29%, are projected to post 2% year-on-year earnings growth.

Sector outlooks within the brokerage’s coverage include overweight positions on cement, pharmaceuticals, engineering; market-weight views on commercial banks, fertiliser, exploration and production, automobiles, oil marketing companies, textile composite, and power; and an underweight stance on chemicals.

Companies highlighted as preferred picks include MEBL, BOP, MCB, HBL, FFC, OGDC, PPL, LUCK, MLCF, FCCL, INDU, PSO, AGP, SEARL, ILP, MUGHAL, ISL, CNERGY, and PAEL, while the “Alpha Picks” list features PIBTL, BBFL, TOMCL, INIL, GCIL, CPHL, and PTC.

Credit: INP-WealthPk