Iran-Israel War: In the quarter that was expected to solidify India Inc.'s recovery, profit expectations across all sectors appear to be dashed. This is nothing short of a wake-up call.

Iran war poses a serious threat to India Inc.

Iran-Israel War: Crude oil prices surpassing $110 per barrel and rising tensions in Iran are a wake-up call for the Indian economy as well as India Inc. This could reduce the dream of double-digit growth in corporate earnings for the 2026-27 fiscal year to single digits. Companies have begun announcing their results for the fourth quarter of FY26.

Fear of a significant reduction in earnings

IT giant Tata Consultancy Services (TCS) will also announce its results on April 9. In the quarter that was expected to mark India Inc.'s recovery, profit expectations across all sectors appear to be dashed.  

"If crude oil prices remain high and restrictions on gas availability continue, another round of earnings cuts is inevitable," warns Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited. "Earnings cuts will be in sectors that are highly import-dependent and linked to crude oil."
 

What is India Inc.?

India Inc. is the term used to describe the country's corporate sector. It includes government-owned companies, large business houses like Reliance, Adani, and Tata, as well as companies listed on the stock exchange. They contribute approximately 60 percent of the country's nominal GDP. These sectors include manufacturing, trading, business services, and construction.

Alarm bells for India Inc.

• Rising crude oil prices will negatively impact the paint, lubricants, plastics, and chemical industries. Rising crude oil prices will increase the cost of producing these products. This will reduce companies' operating margins, as increased input costs are not immediately passed on to customers.
• If oil becomes more expensive, transportation and logistics costs will increase. This will lead to widespread inflation. As inflation increases, people's spending power will decrease. This will lead to lower demand in sectors like FMCG and auto.
• Experts believe that if oil prices remain at $110 for a long time, it could cause India's GDP to fall below 6 percent, which was earlier estimated to remain above 7 percent.
• If the war drags on for a long time, the earnings of companies included in Nifty-50 can fall by up to 4 percent.

Which sectors will be most affected?

The rise in crude oil prices will have the greatest impact on energy-based sectors. Vijaykumar explains, "Industries that use petroleum inputs, such as paints, adhesives, and tires, will be affected. Manufacturers of products like vitrified tiles that use LNG as fuel have suffered significant losses."

He adds that the impact will be felt most strongly in the first quarter (Q1) of FY27 rather than Q4. Santosh Meena, Head of Research at Swastika Investmart, says, "The sectors most affected are those with high energy consumption—such as fertilizers, chemicals, ceramics, paints, glass, and tires—which are facing significant margin pressure due to the severe LPG/LNG shortage, plant shutdowns, and sudden increases in input costs. The auto and aviation sectors are similarly grappling with production disruptions and rising fuel prices, which are directly impacting profitability and reducing consumer demand."

IT services are expected to end the fiscal year on a slower note, as global uncertainty is delaying order fulfilment

. Furthermore, export-oriented sectors such as oil marketing companies, logistics, and gems and jewellery are also experiencing a broad slowdown. In contrast, the upstream and defence sectors remain relatively strong.