2 min read
Pakistan’s benchmark KSE-100 Index is expected to hit 203,000 by December 2026, offering an estimated 26% total return including dividends, as macroeconomic reforms, improved liquidity, and policy measures bolster investor confidence, according to a Topline Research report.
The projection is based on a forward price-to-earnings ratio of 7.6x for 2027, up from the current 6.8x, alongside an expected earnings growth of 7%. The brokerage anticipates further re-rating to 8.0x by mid-2027, mirroring historical valuation ranges during FY12-FY15.
Key factors supporting market momentum include:
- Delaying LNG payment pressures and preventing new circular debt in power and gas sectors.
- Clearing old gas dues and advancing PIA privatization.
- Potential Eurobond/Sukuk issuances and clarity on the new NFC award.
- Progress on Reko Diq project and budget relief measures for exporters.
A Topline analyst noted,
“Local investors are shifting funds from low-yield fixed-income instruments to equities, reflecting confidence in the market’s growth potential.”
Sector preferences for 2026 include cement, exploration & production (E&Ps), and oil marketing companies (OMCs), while investors remain cautious on textiles, power generation, and steel. Topline also highlighted specific stock picks, including OGDC, PPL, MEBL, HBL, FFC, ENGRO, LUCK, MLCF, SYS, SAZEW, and PAEL.
With the market cap to M2 ratio at 47%, below the historical average of 53%, analysts see room for further expansion in Pakistan’s equity market as GDP growth is projected at 3–3.5% in FY26 and 3.75–4.25% in FY27.
