Casablanca stocks could become cheaper as corporate profits rise in 2027, analysts say

Moroccan companies are expected to earn more money in 2027 while their shares become cheaper relative to those profits, according to new forecasts from BMCE Capital Global Research (BKGR), offering a potential turning point for the Casablanca Stock Exchange after two months in which rising borrowing costs have pushed investors away from equities despite improving corporate results.

The benchmark MASI index lost around 12% between August and October, even as listed companies reported a 7.4% increase in first-half profits, or 14.2% after excluding major exceptional items. The divergence has drawn attention to pressures beyond corporate performance, particularly rising Treasury bond yields, which make fixed-income investments more competitive with shares while increasing the return investors demand for taking on stock market risk.

In an October 19 assessment, CFG Research traced the market’s correction to uncertainty over government financing requirements, tightening bank and foreign-currency liquidity, and concerns about inflation in 2027. Morocco’s extensive infrastructure investment programme forms part of that financing backdrop, with investors watching how public borrowing needs and liquidity conditions develop alongside spending on transport, construction and other major projects.

Against those pressures, BKGR expects the combined net profits attributable to shareholders of 40 listed companies to rise 11.4% to MAD 50.6 billion in 2026, followed by another 6.9% increase to MAD 54.1 billion in 2027. If market capitalization remains stable, that growth would bring their price-to-earnings ratio down from 20.6 in 2025 to 16.8 in 2027, compared with a 10-year average of 20.3.

The forecast is not simply a prediction that companies will keep earning more. It anticipates a change in where those earnings come from, as banking, construction and electricity take over from mining as the principal contributors to profit growth.

Banks alone are expected to account for 43.6% of the increase in profits next year, supported by lending and commission income, while construction and public works would contribute 26.6% as contractors benefit from major infrastructure projects. Electricity would account for another 15.1%.

That shift matters because some of the gains recorded in recent years have depended on transactions unlikely to recur. Managem, for example, is expected to benefit in 2026 from an exceptional capital gain of approximately MAD 1.5 billion linked to the sale of a 45% stake in Sudan’s Gabgaba gold project, while comparisons in the telecommunications sector have been affected by the financial settlement between Maroc Telecom and Wana.

Removing such exceptional effects, BKGR expects underlying earnings growth of 10.2% in 2027, above the headline increase of 6.9%.

Portfolio management adviser Othmane Bousrif told Hespress that stronger contributions from banks, construction and electricity could make corporate earnings more sustainable, although contractors would still need to convert growing order books into profits and cash flow.

For shareholders, the forecasts also point to higher distributions, with combined dividends projected to increase from MAD 26.4 billion in 2026 to MAD 28.6 billion in 2027, raising the expected dividend yield to 3.1% from 2.6% in 2025.

Yet cheaper valuations do not necessarily mean the market has reached its bottom. Financial analyst Nabil El Khabbat told Hespress that declining price-to-earnings ratios can reflect stronger profits, falling share prices or both, and that investors still need to examine companies’ debt, margins and growth prospects.