New Delhi [India], November 13 (ANI): India's industrial equipment sector is expected to benefit from easing raw material prices and freight costs in the coming quarters, potentially leading to a recovery in manufacturers' profit margins, according to a report by Jefferies.
The report noted that crude oil prices and freight rates had surged by 29 per cent and 131 per cent, respectively, since March 1, 2026, mainly driven by US-Israel-Iran tensions.
Highlighting the recent moderation in costs, the report stated, "Post the US mid-term election, crude oil declined 10% and other commodities/freight prices stabilized or dipped."
At the time of reporting, Brent crude was trading at around USD 96.36 per barrel, while crude oil was trading at around USD 88.99 per barrel.
The report further noted that industrial equipment manufacturers, particularly those in the generator-set (genset) segment, could witness a sharper-than-expected recovery in profit margins as commodity and logistics costs ease.
"India’s genset industry is fairly consolidated with three players having 50-80% market share in Medium (MHP) to High Horsepower (HHP) products," it said.
According to Jefferies, genset manufacturers were able to pass on price increases of 30–50 per cent to customers for engine upgrades during FY24–FY26.
However, rising commodity prices and logistics costs weighed on profitability in the first half of FY27, resulting in a year-on-year decline of 418–506 basis points in margins.
"... we anticipate a margin recovery between price hikes, some cool-off in commodities and a rise in export revenues as freight rates stabilize," the report stated.
Jefferies also highlighted that easing raw material and logistics costs could emerge as a key positive trigger for India's industrial equipment sector in the coming months.
Since March 1, 2026, steel prices have risen by 18 per cent and copper prices by 4 per cent, while aluminium prices have declined by 1 per cent.
Meanwhile, a 3 per cent depreciation of the Indian rupee against the US dollar has further increased cost pressures on domestic manufacturers.
The report noted that higher crude oil prices have affected both the pricing and availability of petroleum derivatives, including PVC and plastics, which are key raw materials for industrial companies.
Additionally, it stated, "Sharp rise in freight costs impacted export revenues of companies, apart from having a cost impact on imported components." (ANI)
India's industrial equipment sector likely to see margin recovery as raw material, freight costs ease: Jefferies
