Sunil Tirumalai, head of research & equity strategist at Emkay Global Financial Services sharing the details about his report on the key market losers and winners of the coronavirus outbreak said companies with a heavy supply linkage to China are the most impacted.

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“One sector which stands out is the durable space. We are heading into the peak season and up to 90 percent of some of the components in white goods are imported from China. We are not sure if it can be easily replaced by other markets very quickly, and at the scale required,” he said.

“Some of the chemicals, agro-chemicals, specialty chemicals companies, which are not backward integrated have a lot of dependency on China and some of those facilities are not fully functional yet in China. So, that is something that could also get affected. For example Vinati Organics, Rallis India, Dhanuka Agritech etc.,” said Tirumalai in an interview with CNBC-TV18.

Talking about the auto sector, he said, “About 10-11 percent of Tata Motors' sales are from China. I don’t think people are visiting car showrooms and buying cars in China today, so there will be a demand impact. The supply impact is smaller but demand impact is what we should be worried about.”

On the pharma space, he mentioned, “We could see some of the companies benefiting from API prices going up because of shutdown of supply from China. Divis is one which recently backward integrated and probably Granules India as well. However, for the US market, supply is not such a big threat as of now because our inventories are fairly high.”

According to him, FMCG companies should benefit from reduction in input costs. “As long as disruption and demand slowdown is there the FMCG companies should benefit from the input cost reduction that has happened. It should help for one-two quarters,” he further added.

First Published:Feb 20, 2020 1:46 PM IST