Reliance, HDFC Bank, Bajaj Finance amongst top contenders to touch $1 trillion market value by 2032: ICICI Securities

calculations suggest that India’s first US Dollar 1 trillion market cap (m cap) stock could emerge by 2032. , , are amongst the top contenders that could reach $1 trillion market value by 2032 as per ICICI Securities. The macro framework for any company reaching the $1 trillion market value is based on the assumption of reaching peak corporate profitability (7% ‘net profit to GDP" ratio) in the listed space driven by gradual advancement towards peak GDP growth of 9%.

HDFC Bank’s hurdle rate of 25.5% against its historical profit growth trajectory of 20% makes the stock a prime contender for reaching market cap or $1 trillion, with scope for valuation re rating, said analysts at ICICI Securities. Reliance Industries could make it to $1 trillion market values if its longer term profit growth trajectory jumps to 21%, said analysts at ICICI Securities.

Bajaj Finance will need to maintain its past growth rate of 35% 40% over the next decade to reach the $1 trillion market cap mark, assuming no P/E re rating. . Their macro assumptions for achieving a $ 1trillion market cap by 2032 include Largest stock’s mcap to aggregate mcap ratio will have sustained at an average of ~5.8% over the past two decades (max.

10%/min. 3.6%). Continued rise in ‘net profit to GDP’ ratio to reach 7% by 2032, while real GDP growth will progressively expand from 7% in FY24 to reach previous cycle’s peak of 9%. They do not assume any expansion in market valuations from current levels, but a faster than GDP expansion of corporate profits will result in Mcap/GDP reaching 160% without any expansion of Price to earnings.

GDP expansion is to be driven by the capex cycle (real estate, manufacturing, infra etc), re leveraging cycle, discretionary consumption Other key assumptions of ICICI Securities include – ratio of the largest stock’s market cap to aggregate market cap sustaining at long term average of 5 6% and no re rating in Price to earnings ratios from current levels.

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