Arif Habib Limited (AHL), a prominent brokerage and investment banking firm, anticipates the Pakistan Stock Exchange’s benchmark KSE-100 index to reach 81,000 by December 2024. The firm’s report, titled “Targeting 81,000; Resilience and Redefined,” cites robust earnings growth, attractive valuation, substantial domestic liquidity, and stable economic growth as key factors driving a projected 32 percent total return in 2024.
AHL’s survey on stakeholder expectations for 2024 macroeconomic indicators and the capital market revealed that 61 percent expect the KSE-100 index to close above 70,000 points, 36 percent anticipate it between 65,000-70,000 points, and 4 percent predict a close below 57,000 points.
The report identifies major themes for 2024, including compelling valuations, substantial domestic liquidity, and improved macros and monetary easing. AHL projects double-digit earnings growth across sectors, with a notable 17.2 percent expected earnings growth for KSE-100 in 2024.
The report highlights sector-specific growth expectations, such as an 18.8 percent jump in the banking sector, significant gains in the Cement (+43.8 percent) and Steel (+13.5 percent) sectors, and positive outlooks for the fertilizer, energy, textile, and refinery sectors.
AHL emphasizes the current investment opportunity, with the KSE-100 index presenting a low PE multiple of 4.1x, below its 5-year and 10-year averages. The PB multiple is at an all-time low of 0.7x, and the current dividend yield stands at an impressive 11 percent.
The report also discusses the Bond Equity Earnings Yield Ratio (BEER), which is currently at 0.63, suggesting potential market upside. Furthermore, Pakistan’s equity market has room for expansion in its market capitalization to GDP ratio, presenting incremental market cap potential.
AHL notes that companies are strategically opting for share buybacks in the high-interest-rate environment, enhancing shareholder value and signaling confidence in their stock. The report also anticipates increased IPO activity in 2024, with around 5-6 new IPOs across various sectors.
