BQ Blue's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer BloombergQuint's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Motilal Oswal Report
In this sector update, we analyse the price movements of key commodities and identify companies under our coverage that could benefit from or be impaired by the recent spike in crude oil and agri commodity prices in the backdrop of the ongoing tensions in Ukraine – the region being is a major global exporter of food grains and edible oils.
India was entrenched in its battle with the third Covid-19 wave in January 2022, which fortunately was short-lived and had a lower all-round impact. Companies in our coverage universe saw minimal disruptions to their operations this time around, with mobility resuming in February 2022.
However, mounting geopolitical tensions in Ukraine and Russia, which culminated in an armed conflict last week, had a sudden and severe impact on certain agri-commodity prices.
Crude oil prices surged on fears of a supply crunch, given that Russia is a major oil-producing nation. With already elevated levels of commodity prices being driven higher in Q4 FY22 till date, we expect most companies to see a sequential contraction in their gross margins.
To combat the higher input costs, companies will continue to raise prices in Q4 FY22. However, it is likely that the full extent of raw material inflation may not be passed on to consumers.
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