Target Price

A target price is a projected future price for a stock, derived through fundamental valuation models — such as Discounted Cash Flow (DCF) analysis, Price-to-Earnings (P/E) multiples, Price-to-Book (P/B) ratios, or Sum-of-the-Parts (SOTP) valuation — by equity research analysts at brokerage houses, investment banks, and rating agencies. Target prices represent the analyst's estimate of the stock's intrinsic value over a specified time horizon (typically 12 months), based on assumptions about future earnings growth, margin expansion, and the appropriate valuation multiple. SEBI-registered research analysts are required to disclose the basis and assumptions underlying their target prices in their research reports. For Indian equity investors, target prices from reputable research houses serve as reference points for investment decisions. However, target prices are forecasts subject to significant uncertainty — analyst consensus estimates frequently get revised in response to quarterly results, management guidance changes, and macroeconomic developments.