Trump tariff impact: Dozens of stocks take a beating; do you own any?

Stocks of manufacturers of engineering goods such as Apar Industries and Ingersoll-Rand (India), textiles players such as Welspun Living Ltd and Gokaldas Exports Ltd, shrimp exporters such as Avanti Feeds and Apex Frozen and auto part makers such as Bharat Forge and Sona BLW took a beating in Thursday's trade amid Trump's imposition of 25 per cent tariffs on Indian exports. To be sure, pharmaceuticals and electronics are currently not subject to tariffs, given the ongoing section 232 investigations. But as these sectoral tariffs are imposed, the higher tariff burden will be required to pass on to end-consumers, analysts warned. 

The US is India’s largest export destination, accounting for 18 per cent of total exports and 2.2 per cent of GDP. Amnish Aggarwal, Director - Research, Institutional Research at PL Capital said India exported $3–4 billion of machinery and engineering goods to the US in 2023 (excluding electronics), spanning engines, pumps, industrial equipment, and railway stock. 

"We expect negative impact of exporters of engineering goods. Elgi Equipment, Apar, Ingersoll Rand, Cummins and Carborundum have 25/14/13/8  per cent sales from US and could see some impact in coming quarters. Praj Ind was looking at US exports for its new Unit which might see further delay in ramp up," Aggarwal noted. 

Apar Industries plunged 5.03 per cent to Rs 9,174.70. Ingersoll-Rand (India) Ltd fell 1.29 per cent to Rs 3,885.Cummins India Ltd declined 1.46 per cent to Rs 3,530.90.  Carborundum Universal Ltd slipped 0.92 per cent to Rs 944.75. ELGI Equipments Ltd was down 0.58 per cent at Rs 564.05. 

Automobiles and auto components companies are expected to see a limited direct impact so far. India exports auto components of $2.1 billion — including forgings, engine parts, and wheels, integrated into global OEM supply chains. This will increase import costs for US supply chains and can pressurizse margins of exporters. Bharat Forge, Motherson, Sona Comstar are expected to see some impact, PL Capital said. These stocks were down up to 3 per cent today. 

Avanti Feeds Ltd, Apex Frozen Foods and Waterbase Ltd fell up to 7 per cent. Foreign brokerage Nomura noted that India majorly exported marine food products to the US and that shrimps and prawns account for 2.3 per cent of overall exports to the US.

In the case of textiles and apparel, they are a key export sector with shipments to the US totaling $2.8 billion in FY24. Tariff before April were 6.8 per cent. Indian exports to USA involve more of home textiles and yarn and these segments could see some impact, PL Capital said. Gokaldas Exports Ltd plunged 6.49 per cent to Rs 831.80. Welspun Living Ltd tanked 4.93 per cent to Rs 126.25. 
 
Meanwhile, gems & jewellery exports at $9.9 billion accounted for 12 per cent of the US exports. It includes cut and polished diamonds and lab-grown diamonds. The new 25 per cent tariff significantly increases export costs. The sector remains vital to employment and could see some impact on exports.

Nomura explained that for export sectors, the tariff impact is likely to vary depending on their elasticity of demand, extent of value added and the level of cost and scale competitiveness. 

"Margin squeeze is likely across-the-board, but may particularly hit manufacturers in sectors with lower value added and thinner margins, including gems & jewelry and textiles. India also majorly exported marine food products to the US (shrimps and prawns account for 2.3 per cent of overall exports to the US), and India could lose some of its competitive edge to other suppliers," it said.