Stock impact: Winners & losers from Iran war; primary, secondary effects across 10 sectors

Earnings of at least 10 sectors in India are likely to be influenced by the ongoing war between Iran and the US and Israel, largely due to higher crude oil prices in the near term. Oil marketing companies, city gas distributors, paints, agri-chemicals, building materials and tyres are among the sectors seen as negatively impacted by the war. Upstream oil companies and defence manufacturers are seen as some of the beneficiaries.

Industrials
In the case of industrials, the Middle East accounts for 50 per cent of the order book and over 40 per cent of revenue for Larsen & Toubro Ltd (L&T). Any near-term execution challenges could arise if the current situation continues for some time. Long-term infrastructure reconstruction of damaged assets would be positive for L&T, Antique Stock Broking said.

"Oil price firming up, if it stays elevated for a long time, will also support capex programmes in the Middle East as crude supports the region’s capex programme," it said.

Building materials
The US-Iran conflict could present a second-order risk for both tile and PVC pipe players, analysts said. For tile manufacturers, higher gas costs could pressure margins in the near to medium term, especially if competitive intensity restricts timely pass-through of the gas cost surge. Similarly, PVC pipe players may face feedstock price volatility linked to crude movements, with margin and earnings sensitivity dependent on cost pass-through as well as a build-up in channel inventory, Antique said.

The brokerage said stocks likely to be impacted include Kajaria Ceramics Ltd, Somany Ceramics Ltd, Apollo Pipes Ltd, Astral Ltd and Finolex Cables Ltd.

Agrichem
The US-Iran conflict is seen materially impacting the fertiliser industry, as India imports a significant portion of ammonia and sulphur from the Middle East via the Strait of Hormuz. Any escalation may disrupt supply chains and inflate input costs, Antique said.

Every 10 per cent increase in ammonia and sulphur prices is estimated to have an Rs 1,500 per metric tonne impact on Ebitda per mt.

"We expect near-term profitability of our coverage universe, including Paradeep Phosphates Ltd and Coromandel International Ltd, to remain largely intact, supported by raw material inventory cover of 25-30 days," Antique said.

BFSI
Higher crude prices are seen resulting in higher borrowing costs for the government, leading to higher bond yields and lower treasury gains for public sector banks.

Defence
Antique said defence companies such as Bharat Dynamics Ltd (BDL) and Bharat Electronics Ltd (BDL) have supply chain dependence on Israel. Any prolonged geopolitical issue with Iran could lead to supply chain risks for these companies, a glimpse of which was witnessed earlier during the Israel-Palestine conflict, it said.

It added that Apar Industries Limited may be impacted in the form of higher insurance and freight costs.

Transportation
In the case of Adani Ports and Special Economic Zone Ltd, Haifa Port in Israel handled only 2.4 per cent of total volumes in FY25. Crude and liquid volumes accounted for 10.1 per cent in FY25 and could be at risk until the conflict subsides.

Auto
Given the recent volatility in crude prices, the tyre sector faces a secondary-order earnings impact. Key raw materials, synthetic rubber accounting for 25-30 per cent of raw material costs, carbon black accounting for 20 per cent, and other derivatives, are all linked to crude oil.

"We view the current correction in tyre stocks as a buying opportunity from a medium-term perspective. Near term negative for Balkrishna Industries Limited, MRF Limited, Apollo Tyres Limited, CEAT Limited, JK Tyre & Industries Limited and TVS Srichakra Limited," Antique said.

IT Services
The top five IT services firms are targeting Middle East and GCC revenue to reach around 5 per cent over the next few years. Currently, their exposure is slightly below 5 per cent. Among mid- and small-cap companies, most have exposure of less than 5 per cent. However, Newgen Software Technologies Limited derives approximately 30 per cent of its revenue from the Middle East. LTIMindtree Limited and L&T Technology Services Limited also have relatively higher exposure, at around 10 per cent each.

FMCG
Antique said a 10 per cent increase in crude could result in a 200-250 bps gross margin contraction for Asian Paints Limited and Kansai Nerolac Paints Limited, as crude and its derivatives account for 40-45 per cent of raw material costs.

It is also seen resulting in a 30-50 bps gross margin contraction for Emami Limited, as crude and its derivatives account for 10-15 per cent of its raw material costs.

Oil & gas 
Antique said if crude oil prices rise $10, upstream companies such as ONGC and Oil India may see Ebitda rising 20-21 per cent and PAT 29-32 per cent. OMCs in such a case may see sharp downside with Ebitda falling 51-73 per cent and PAT 72-78 per cent. City gas distributors such as IGL, MGL and Gujarat Gas may see up to 48 per cent Ebitda impact, depending on base margins and Brent-linked gas exposure.