The late Rakesh Jhunjhunwala made his famous Nifty 50 prediction in December 2014, when the index was trading at 15,000 with an earnings per share (EPS) of around 400 and a price-to-earnings (PE) multiple of around 20. According to reports from NDTV Profit, Jhunjhunwala's massive 1,25,000 target wasn't based on random guesswork but on one incredibly bold assumption: he believed Nifty earnings would grow at an 18% compound annual growth rate (CAGR) for 15 straight years. Based on this projection, he figured the EPS would multiply by 15 times over that period, with the market maintaining the same PE multiple of 20 to reach the 1,25,000 mark. The story starts back in December 2014, when the Nifty was trading at 15,000, with an EPS of around 400, and a PE multiple of around 20. Jhunjhunwala's massive 1,25,000 target wasn't just pulled out of thin air. It was built on one incredibly bold bet: he believed that Nifty earnings would grow at an 18% compound annual growth rate (CAGR) for 15 straight years. Based on this, he figured that an 18% CAGR would cause the EPS to multiply by 15 times over that period. He assumed that even if the market traded at that same PE multiple of 20, it meant the Nifty would come close to the 1,25,000 mark.
The original calculation contained a fundamental mathematical error that became apparent over time. As reported by NDTV Profit, even in a flawless scenario where Nifty EPS managed an 18% CAGR for 15 years, it wouldn't result in a 15x growth. The reality of compounding shows that an 18% CAGR over 15 years yields approximately 12 times growth, not 15 times. Applying the correct multiplier, an EPS of 400 growing 12 times would reach roughly 4,800 by 2030. Multiplying this projected EPS by a PE of 20 would take the Nifty to around 96,000, still a phenomenal return by any measure, but short of the 1,25,000 target. The thing about back-of-the-napkin calculations -- they don't always hold up under a microscope. Even in a flawless, dream scenario where Nifty EPS managed a relentless 18% CAGR for a decade and a half, it wouldn't result in a 15x growth. The reality of compounding is that an 18% CAGR over 15 years yields about 12 times growth.
The period between 2014 and 2020 presented significant challenges for Jhunjhunwala's prediction. According to NDTV Profit, during this agonisingly slow stretch, earnings didn't just slow down - they practically flatlined as banks and India Inc focused on deleveraging their balance sheets from post-2008 excesses. The Nifty EPS crawled from 400 to just about 450 during this period. By February 2021, following the pandemic chaos, the EPS had fallen back down to 400, meaning seven long years after Jhunjhunwala made his prediction, the baseline earnings were sitting at the exact same level as when he started. For investors, the stretch between 2014 and the pre-COVID days of 2020 was an agonising wait. Earnings didn't just slow down; they practically flatlined as banks and India Inc focused on deleveraging their balance sheets from the excesses of the post-2008 years. During this agonisingly slow stretch, the Nifty EPS crawled from 400 to just about 450.
In 2021, with the Nifty trading around 15,000, Jhunjhunwala openly admitted that his initial timeline was "too optimistic." As reported by NDTV Profit, he came back with a revised target of Nifty 1,00,000 by 2030, this time without projecting any specific PE or EPS numbers to back the forecast. Since February 2021, earnings have seen a massive resurgence with the Nifty EPS surging at an impressive 24.5% CAGR, multiplying by 3.20 times to about 1,200. However, today the Nifty sits around 23,000 with a PE ratio of 19. To his credit, the Big Bull was open to correcting himself in the face of new facts. In 2021, with the Nifty trading around 15,000, Jhunjhunwala openly admitted that his initial timeline was "too optimistic." But he didn't abandon his bullish spirit. He came back with a slightly revised target: Nifty 1,00,000 by 2030. This time around, he did not project any PE or EPS number to back the forecast.
To achieve the revised Nifty 1,00,000 target by 2030 from current levels, significant growth would be required. According to NDTV Profit, assuming the market maintains its current PE multiple of 19, the EPS would have to grow 4.4 times to ₹5,200 in just four short years. This would require Nifty earnings to compound at a mind-bending 45% CAGR. If the Nifty gets re-rated to 25 times, the EPS would need to grow to ₹4,000, calling for an annualised growth of 35%. If it grows at the 25% clip like recent years (yielding an EPS of ₹3,000), the market would need to get re-rated to an astonishingly high multiple of 33 times - considered possible but potentially bubble territory. Jhunjhunwala was undoubtedly right about the structural, long-term bull market in India. He saw the big picture when few others did. But it's possible his 2030 projection might just have to remain too insurmountable a target. Essential Business Intelligence, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.
