scenario-forecasting

name	scenario-forecasting
description	Build 1-year bull/base/bear stock-price scenarios for NSE/BSE equities. Use when the user asks about upside, downside, expected growth, target range, good scenario, bad scenario, or 12-month price outlook.

Scenario Forecasting

Use ranges, not a single magic target. Tie every price range to business and valuation assumptions.

Data dependency: This skill requires current price, EPS, and a valuation multiple from valuation-analysis or stock-profile. If used standalone, gather those inputs first.

Minimum Data Threshold

Do not produce bull/base/bear scenarios unless you have at least:

• Current price and market cap
• At least 2 years of revenue and PAT history (or reasonable proxy)
• Current P/E or EV/EBITDA and a sense of historical range
• One clearly identifiable growth driver or risk factor

If data is below this threshold, state the gap explicitly and issue Low-confidence scenarios only. Do not generate numerically precise ranges when the inputs are too thin to support them.

Scenario Structure

Scenario	Basis
Bull Case	Strong earnings, margin expansion, sector tailwind, market-share gains, valuation re-rating
Base Case	Reasonable growth, stable margins, fair valuation, no major surprise
Bear Case	Weak earnings, margin pressure, bad news, de-rating, technical breakdown, governance or sector risk

Worked Example

Stock: XYZ Ltd | Current price: Rs.500 | Current P/E: 25x | FY25 EPS: Rs.20 | Expected EPS growth: 15%

Bull case (5x multiple expansion + EPS growth):

• Year-1 EPS = 20 × 1.15 = Rs.23
• Multiple expands to 30x (justified if ROCE improves and sector re-rates)
• Target = 23 × 30 = Rs.690 | Upside: +38%

Base case (EPS growth, multiple holds):

• Year-1 EPS = Rs.23
• Multiple stays at 25x (no change in sentiment)
• Target = 23 × 25 = Rs.575 | Upside: +15%

Bear case (multiple compresses):

• Year-1 EPS = 20 × 1.05 = Rs.21 (margin pressure, growth slows)
• Multiple compresses to 20x (sector de-rating or governance concern)
• Target = 21 × 20 = Rs.420 | Downside: −16%

Range: Rs.420–690 | Base: Rs.575

Adjust the assumptions to match the actual stock. Never present the arithmetic as certainty.

Calculation Steps

1. Start with current price and current multiple.
2. Estimate year-1 EPS using conservative growth (default: street consensus if available; otherwise use 1-year historical growth × 0.8 as a buffer).
3. Choose bull/base/bear multiples based on the scenario definitions.
4. Cross-check implied prices against technical resistance (bull) and support (bear) zones. Flag any significant disagreement.
5. Convert ranges to percentage upside/downside from current price.
6. Assign confidence: High only when data quality is strong and assumptions are conservative; Medium by default; Low when data is incomplete or stock is highly uncertain.

Output

## 1-Year Price Outlook
| Scenario | Price Range | Upside/Downside | Key Assumptions | Trigger | Invalidation |
|----------|-------------|-----------------|-----------------|---------|--------------|
| Bull | Rs.X-Y | +X% to +Y% | ... | ... | ... |
| Base | Rs.X-Y | +X% to +Y% | ... | ... | ... |
| Bear | Rs.X-Y | -X% to -Y% | ... | ... | ... |

Scenario verdict: [short explanation of which case has the highest probability and why]

State clearly: these are educational scenario estimates, not guaranteed targets.