Gulf War: Stocks That Could Buck The Trend And Shine

10 stocks from the Nifty 200 index that offer good growth potential and scope to deliver decent returns from current levels, based on brokerage estimates.

The West Asia war has sent asset markets into a tailspin as investors count the economic and financial costs due to the disruption in oil and gas markets.

A sharp rise in crude oil and natural gas prices due to the war is likely to weigh on public finance and economic growth of oil and gas-importing countries, including India.

Corporate earnings are also likely to take a hit as companies in many sectors may see margin compression from higher energy and commodity prices.

The war and the resulting closure of the Strait of Hormuz have also disrupted the global availability of key fertilisers such as urea, which could weigh on food production in the forthcoming planting season in the Northern Hemisphere, leading to higher food inflation.

The Indian equity market has been one of the worst hit given the country's high trade and economic linkage with countries in the Persian Gulf region.

The benchmark Nifty 50 was down 11.3 per cent during March, led by a large selloff by foreign portfolio investors (FPIs).

The index is now down 13 per cent in the first three months of calendar year 2026 (CY26), one of its worst first quarters in many years.

This has raised fears of a sharp downward revision in the forward earnings estimates and target price of leading companies.

Most brokerages and equity analysts, however, remain optimistic and expect a quick end to the hostilities, leading to early resumption of economic activity in the Persian Gulf region.

The downward revision in the 12-month forward target price has been mild. For example, the Nifty 50 one-year forward target price is down just 0.14 per cent from 29,512 at the end of December 2025 to 29,471 at the end of March this year.

At this rate, the index is expected to rally nearly 32 per cent by the end of March 2027, from its March-end value of 22,331.

This has created a big gap between the current Nifty 50 value and forward target estimates.

In fact, barring March 2020, which saw markets tank due to the COVID-19 pandemic, this 32 per cent gap is the biggest (on a monthly basis in percentage terms) since March 2009 at least.

This also reflects in the forward price target of individual stocks. The optimism could turn out to be true if the war ends quickly, or if countries find a way to easily move cargo ships and oil tankers through the Strait of Hormuz once again.

Here are ten stocks from the Nifty 200 index that offer good growth potential and scope to deliver decent returns from current levels, based on brokerage estimates.

Many of these stocks are also likely to gain from a rise in commodity prices due to the economic disruption caused by the war.

Blue Star

• There could be near-term headwinds for the air conditioning (AC) equipment major, given supply disruption on the input front and the cumulative price increase of 17-18 per cent over the past few months, which could impact demand
• Citi Research, however, believes that the room AC/cooling segment could see improved demand in Q4 (peak demand season) while margins should remain under pressure, led by higher raw material cost and currency depreciation
• The company has strengthened its manufacturing footprint by expanding capacity from 1.4 million units to 1.8 million units to meet rising demand and support growth, points out JM Financial Research
• The commercial refrigeration segment is witnessing strong structural momentum, supported by rising out-of-home consumption, expansion of organised food retail and quick commerce, and the increasing need for reliable temperature controlled storage and logistics infrastructure

Nestle

• After reporting a 18.6 per cent growth in revenue in the third quarter aided by the strongest volume growth in five years, the food and beverage company is estimated to report its third straight quarter of double-digit growth (15 per cent) in the fourth quarter
• Barring milk and nutrition products, other segments such as confectionery and Maggi noodles, along with beverages and prepared dishes have delivered strong growth powered by a cut in goods and services tax in recent quarters
• While gross margins could recover as both coffee and cocoa costs have cooled off, operating profit margins could come under pressure given higher marketing spends, points out HSBC Research
• Nestle remains a top pick of Axis Securities as it remains well positioned for long-term growth, underpinned by its dominant domestic franchise, continued innovation, distribution-led market penetration, capacity expansion, and increasing out-of-home consumption

Cipla

• Pharmaceutical major, Cipla's third quarter performance was a muted one, given significantly lower US sales and margins
• This sharp fall in the US business was on account of declining sales of the generic version of cancer drug Revlimid and supply constraints in acromegaly treatment drug, Lanreotide. Supply headwinds will continue to weigh on the near-term outlook
• Domestic sales continue to be on a strong footing in Q3 with sales growing 10 per cent year-on-year (Y-o-Y) and Cipla has outpaced the market in key therapies like respiratory, cardiac, antidiabetic, antiinfectives, and urology
• Growth drivers, according to UBS Research, are intact with a healthy product pipeline to drive growth over the medium term
• Earnings growth during FY26-28 is expected to come from US recovery and strong performance in India and the emerging markets

Tata Consumer

• Its traditional business -- tea, salt, and international -- provides a stable, cash-generative foundation, growing at mid-to-high single digits with sustainable gross margins
• Growth businesses (Sampann, NourishCo, and Capital Foods) are scaling rapidly, supported by a now well-established dedicated distribution infrastructure, points out Motilal Oswal Research. Capital Foods is expected to see some growth moderation especially due to lower exports and distribution structure changes
• Double-digit growth momentum could continue in the fourth quarter (Q4), led by India Foods business, which is expected to grow by 22 per cent year-on-year (Y-o-Y) as compared to 19 per cent in Q3
• HSBC has retained its "buy" rating as Tata Consumer's strong acquisitions and distribution will pay off, along with improving profitability of the growth business

Apollo Hospitals

• After a strong third quarter (Q3), all the three business verticals - hospitals, pharmacy (HealthCo) and ancillary healthcare (AHLL) are expected to maintain their growth momentum going ahead
• Equirus Research expects that from FY28, new beds (2,815 additions between FY27-29) will turn accretive as occupancy ramps up
• Continued opex rationalisation and lower employee stock ownership plan (ESOP) costs should enable digital breakeven by FY28, supporting a 220 basis points operating profit margin expansion to 6.6 per cent for HealthCo over FY26-FY28 period
• Apollo remains the preferred pick of Citi Research in Indian Hospitals space with the positive stance predicated on a structurally resilient hospital business, a fast growing pharmacy business with digital profitability in sight and valuations, which remain below long-term means on an absolute and a relative basis

Coromandel International

• Coromandel International is one of the most recommended fertiliser stocks by brokerages with nine "buy" and just one "sell" ratings
• According to brokerage estimates, the stock is expected to rise to Rs 2,614 in the next 12 months, translating into 40 per cent upside from current level
• The company is expected to gain from a general rise in fertiliser and crop nutrient prices in the aftermath of US-Iran war
• Its net profit was up 45.5 per cent year-on-year (Y-o-Y) in the trailing 12 months ending December 2025 while its net sales were up 32.4 per cent Y-o-Y
• The company has aggressive growth plans with the acquisition of agrochemical major NACL Industries and construction of a greenfield phosphoric and sulphuric acid plant beside a NPK granulation unit
• The expansions will start accruing to its top and bottom line starting FY27
• The stock's valuation are however, higher than fertiliser makers but lower than agrochem companies

Hindalco

• Aluminium maker Hindalco is on the top of the radar of brokerages thanks to a rise in base metal prices
• Aluminium prices are up nearly 41 per cent in the international market due to tight supply and growing demand from construction, power and consumer durable segments
• Prices are expected to rise further due to the ongoing West Asia conflict as two leading aluminium producers in the region have halted production leading to a decline in global supply
• A rise in energy prices is also likely keep aluminium prices higher given high energy intensity production of the metal
• This will help the margins and profits of vertically integrated producers such Hindalco
• The company's net profit was up 15.7 per cent while its net sales were up 14 per cent respectively during the trailing 12-months ending December 2025

Cummins India

• The heavy engine maker Cummins India is another top recommendation of brokerages with 17 'buy' ratings and 5 'sell' ratings
• In recent quarter, Cummins has gained from a strong traction in its export and stationary power segment
• It has also gained from the transition in the genset market to CPCB IV+ leading to higher price realisation per unit
• Its net profit was up 11.6 per cent while its net sales were up 13.3 per cent respectively during the trailing 12-months ending December 2025
• The US-Iran war and the disruption in energy supplies however create short-term challenges for the company
• The stock is trading at a trailing P/E of 57.5x and P/BV of 16.3x, which in the higher side

Vedanta

• Mining & metals major Vedanta is one of the top bets of brokerage given the continued rise in metal prices
• Vedanta has multiple earnings drivers given its leading presence in aluminium, copper, iron-ore, zinc, silver and crude oil
• Given this, it is likely to be one of the top beneficiaries of rise in energy and industrial metal prices after the break-out of war in West Asia
• The stock has rallied in recent weeks despite a weak market and analysts see further upside
• Brokerages expect the stock to rise to Rs 838 over the next 12-month translating into 22 per cent upside from current level
• The company's net profit was up 10.1 per cent while its net sales were down 4.4 per cent Y-o-Y respectively during the trailing 12-months ending December 2025
• The stock is trading at trailing P/E of 19x and P/BV of 5.1x, which is higher than its peers

Britannia Industries

• The ready-to-eat food maker Britannia has been an out-performer in a weak broader equity market
• In the last year, its stock price is up 10.2 per cent against 5.3 per cent decline in the BSE Sensex
• Most brokerages expect the out-performance to continue as investors move to defensives sectors as fast-moving consumer goods (FMCG) as the US-Iran war creates economic uncertainty
• Brokerages expect the stock to rise to Rs 6,753 over the next 12-months translating into 24 per cent upside potential from current levels
• The company reported strong performance in recent quarters with 12 per cent and 7 per cent growth in net profit and net sales, respectively, in the trailing months ending December 2025
• In the short-term however, the company can face margin pressure from higher energy and commodity prices arising from the US-Iran war
• Britannia's valuation remains rich with a trailing P/E of 54.3x and P/BV of 35.1x

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Feature Presentation: Aslam Hunani/Rediff