| 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
- Start with current price and current multiple.
- Estimate year-1 EPS using conservative growth (default: street consensus if available; otherwise use 1-year historical growth × 0.8 as a buffer).
- Choose bull/base/bear multiples based on the scenario definitions.
- Cross-check implied prices against technical resistance (bull) and support (bear) zones. Flag any significant disagreement.
- Convert ranges to percentage upside/downside from current price.
- 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.
