Crisil Ratings in its latest report has said that the profitability impact of the recent West Asia conflict on India Inc is expected to be far lower than initially projected if the US-Iran ceasefire remains intact and energy supplies continue to normalise. It now expects the conflict to shave around 100 basis points off India Inc's operating margins in fiscal 2027, compared with an earlier projection of 200 basis points under a prolonged conflict scenario involving disruptions to shipping through the Strait of Hormuz.
The improved outlook follows a sharp fall in crude oil prices after the reopening of the Strait of Hormuz under a fragile US-Iran memorandum of understanding. However, Crisil cautioned that geopolitical risks remain elevated and gas supplies may take longer to stabilise. It said under the revised scenario, only 10 sectors are expected to witness a meaningful decline in profitability, compared with 22 sectors under the agency's earlier stress-case assumptions, with no sector likely to face a severe hit to revenues or earnings.
The report said sectors expected to remain under pressure include airlines, ceramics, flexible packaging, specialty chemicals, polyester textiles and diamond polishing due to higher input costs, weaker pricing power and supply-chain disruptions. Crisil assigned a moderately negative credit outlook to these six sectors, citing weaker profitability, higher working capital requirements and moderate balance-sheet strength.
It further added that lower crude prices, improving gas availability, continued government infrastructure spending and resilient domestic demand should support revenue growth across industries. It also said policy measures, including the government's Emergency Credit Line Guarantee Scheme (ECLGS) 5.0, which provides an additional Rs 2.55 lakh crore in guaranteed credit, including Rs 5,000 crore for airlines, would help vulnerable MSMEs meet higher funding needs.
Start Research-backed Investing ...Now. Subscribe to Sapphire
MoneyWorks4Me is a SEBI-registered Investment Adviser (IA) dedicated to helping investors build long-term wealth through transparent, research-driven, conflict-free guidance. Founded in 2008, we started our journey as a Research Analyst (RA), providing deep fundamental analysis, intrinsic value insights, and long-term investing frameworks for Indian equities. In 2017, we transitioned to a full-fledged SEBI-registered Investment Adviser, strengthening our commitment to acting as a fiduciary—always putting the investor’s interest first.
To become India’s most trusted, research-powered fiduciary advisory platform—where every investor, regardless of experience, can make calm, confident, and well-reasoned investment decisions.
MoneyWorks4Me ensures this through: