India may be relatively immune to the partial shutdown in China on account of coronavirus but a prolonged shutdown may have material impact on sectors such as steel, oil & gas, pharma, auto ancillaries, consumer durables, IT services and chemicals. India has imported goods from China worth $52 billion between April and December 2019. Electrical machinery, electronics, organic chemical and plastic are among the top items of imports for India from China.

Indian exports to China during this period were worth $13 billion. Companies from these sectors may face pricing and supply-chain shocks. A compilation of some sectors and stocks that are going to be impacted due to the Covid-19 virus, according to Kotak Securities:

STEEL
China is a net steel exporter. China demand has been impacted more than supply, resulting in higher domestic inventory and pressure on domestic prices. Weak domestic steel prices in China and lower iron ore prices outside China have started impacting steel prices outside China too.
Lower steel prices directly impact earnings of all steel producers. Among the four major steel companies, earnings of SAIL and Tata Steel are more sensitive to steel prices at they are more integrated in their operations followed by Jindal steel, said Kotak.
OIL & GAS
Downstream companies will be impacted due to a slowdown in demand for petrochemical and refined products.
Lower refining margins will lead to lower profits for downstream oil companies such as BPCL, HPCL, IOCL and RIL. Upstream companies such as Oil India and ONGC will be impacted due to slower growth in oil and gas demand due to reduction in travel and industrial activities, according to Kotak.
PHARMACEUTICALS
The Indian pharmaceuticals industry has deep linkages to China, given its reliance on China for critical elements of a drug’s supply chain, starting from basic chemicals, key starting materials (KSM), intermediates and even active pharamaceutical ingredients (APIs). Kotak said most companies can manage supply disruptions from China until the end of June; however, there could be meaningful supply shocks if the disruptions are prolonged.
Among Indian companies, Laurus Labs has the highest potential impact from China.
Aurobindo, with an annual 2.5K- tonne requirement, Lupin with a 1K-tonne annual requirement and Sun with a 0.85K-tonne requirement have the largest API consumption requirements for the US, with the top-10 APIs accounting for 70-80% of the total API consumption, the brokerage said.

AGRICHEMICALS
The sector will be impacted due to a disruption in the supply chain of bulk chemicals and intermediates. Kotak said agrichemical players have gradually reduced dependence on China in recent years post environment-led supply disruptions. Domestic players carry around two months of inventories for key raw materials.
Elevated input costs may impact profits for less integrated players such as Dhanuka Agritech and Rallis India, the brokerage said.
AUTOMOBILES & AUTO COMPONENTS
Kotak said it is difficult to quantify the exact impact as components are imported by both OEMs and vendors. Hero Motocorp imports alloy wheels from China, which may get impacted if the situation does not improve in 1-2 months.
The company has supplies for 45-60 days currently. Also, the supply of certain fuel injection parts, imported by Bosch, could be impacted. Tyre manufacturers may benefit as Chinese radial imports may decline although it is a small part of the industry now (around 5%), it said.
CONSUMER DURABLES
The consumer durables sector will be impacted due to a shutdown of manufacturing units in China. Indian durables manufacturers have a large dependence on China for critical inputs such as compressors for air-conditioners and refrigerators.
Almost all requirements of compressors as well as certain other components required for white goods are imported, with a bulk of the same being imported from China.

Kotak said companies that may get impacted are Havells (Lloyd), Voltas, WhirlpoolNSE 0.78 %. Electrical goods and appliances companies such as Crompton GreavesNSE -1.66 % Consumer and Havells also import lighting and switchgear products from China and may be impacted, it said.

IT SERVICES
Travel and transportation is a key vertical for Indian IT services companies with clients comprising airline companies, railroads and hotels. COVID-19 will reduce travel, impact financials and the ability to spend. Mindtree and Hexaware have the highest exposure, said Kotak.
The exposure of other companies is in the mid-single digits. Also, there could be indirect impact in the form of reduced east-bound air travel and potential restrictions on west-bound travel.

Source from indiatimes