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Late Rakesh Jhurwala, the wizard of the stock market and known as Warren Buffett of India, had made such a prediction about the Indian market that it stunned investors from the broker state to the entire world. He had claimed that by the year 2030, Nifty would touch the historic peak of 12,25,000. But today's bitter truth is that big market analysts have now started questioning this figure.
After all, what is the obstacle in the pace of the Indian economy that is proving to be a mistake in Big Bull's biggest prediction? Will Nifty even reach this magical figure by 2030 ? Or was it just the excitement of an Indian bull? Hello, I am Sandhya Bisht with you and you are watching AD Hindi. Rakesh Jhunjhunwala.
Although he had made many types of predictions, but one of his predictions remains a source of hope for many people even today. Friends, he had said that Nifty will touch the figure of 12,25,000 by 2030. Rakesh Jhunjhunwala had made this prediction in the year 2014 at the CNBC TV18 Investor Summit and Nifty will touch the level of 12,25,000 by 2030.
But right now Nifi is unable to even touch the level of 25,000. As 2030 approaches, it becomes increasingly important to consider these figures. Now the question arises whether the prediction of the legendary investor proved wrong ? Veteran investor Rakesh Jhunjhunwala had made this prediction in the year 2014.
At that time Nifty was trending at the level of 8500 and the earnings per share i.e. EPS was around ₹400. EPS means the profit earned on each share of all the companies included in the index. NiFi 's price to earnings ratio was around 20. Now Rakesh Jhunjhunwala's target of 12,25,000 for Nifty was based on his strong belief about future income growth.
He expected Nifty earnings to grow at a CAGR of 18% per annum for the next 15 years. If income grows at 18% per year for 15 years, EPS will increase 15 times. He also assumed that Nifty's PE ratio would be 20%. Based on these assumptions, he had estimated that Nifty could reach around 12,25,000. Now what went wrong with the target ?
There was a mistake in this counting that the figures were not matching. Simple calculations made in a hurry are not always accurate when carefully examined. Even though NiFi's earnings per share have grown at 18% per year for 15 years without stopping. Still the income will not be 15 times its original level.
Due to compounding, at an annual growth rate of 18% over 15 years, EPS will be approximately 12 times its initial level. Now using the correct growth calculation friends, if we use all the growth calculations then the EPS of 400 will increase 12 times to around 4800 by 2030. If we multiply 4800 by the PE ratio of 20, NiFi will reach around 96,000.
NiFi's 96,000 level could still be a huge upside. But this will also be less than Rakesh Jhunjhunwala's target of Rs 12,25,000. The actual market conditions also seem to be becoming a problem. Apart from the counting error, the actual market conditions created problems. From 2014 to the pre-Covid-19 period in 2020, investors had to wait a long time for growth in corporate earnings.
Their income growth had almost stopped as banks and Indian companies were trying to reduce their debt and improve their balance sheets. She was struggling with heavy debt incurred after the 2008 financial crisis. Now, this prediction made by Rakesh Jhunjhunwala, what other picture does it take in the coming time, please give your opinion in the comment box.
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