Calibrated price hikes undertaken to offset rising input costs should support realisations.

The reopening of the Strait of Hormuz following a tenuous US-Iran memorandum of understanding (MoU), if enduring, can materially ease the profitability pressure on India Inc for the rest of this fiscal year versus what was envisaged earlier, a report said on Thursday.

"Energy markets have responded swiftly to the respite, with crude prices softening. However, the availability of crucial inputs such as gas and urea is expected to improve only gradually as structural supply-side disruptions that occurred during the conflict are sorted," Crisil said in a report.

At present, it said, the number of ships transiting the Strait is well below the pre-conflict levels.

If the truce holds and there are no further disruptions, our assessment of 34 sectors exposed to the conflict indicates the impact on operating margins will be contained at 100 basis points (to ~11 per cent this fiscal from ~12 per cent expected prior to the conflict), it said.

"Earlier, assuming a prolonged conflict and closure of the Strait, we had pencilled in an impact of 200 bps," it said.

Further, demand conditions remain underpinned by government-led infrastructure spending and expectations of steady consumption, it said.

Moreover, it said, the calibrated price hikes undertaken to offset rising input costs should support realisations.

"Our analysis of 34 sectors, representing 65 per cent of rated corporate debt, assumes crude oil supplies will normalise swiftly and the price of Brent will average $80-85 per barrel this fiscal. Gas supplies would lag a bit with overall disruption assumed at 4 months for this fiscal. The reopening of the Strait is also expected to gradually reduce India's dependence on high-cost spot gas," it said.

The impact on both revenue and margins will be minimal for 24 sectors, with recovery largely backloaded to the second half, it said, adding that the remaining 10 sectors face a meaningful squeeze with operating margins declining by one-tenth to one-third, compared with the pre-conflict estimates.

For four of these 10 sectors, the credit quality outlook is stable/neutral as the balance sheet strength would cushion the impact of lower profitability, it said.

Whereas for the remaining six sectors, the credit quality outlook is moderately negative3 because of one-tenth or more impact on profitability, higher working capital requirement and moderate balance-sheet strength, it added.

Published on June 26, 2026