India Inc. profit growth outlook slides sharply as Iran conflict raises input costs

A consensus of analysts tracking 200 Indian companies with wide coverage lowered their FY27 profit-growth estimate from 16.5% in February to 9.2% by September, a drop of roughly 730 basis points, as the Iran-US-Israel war lifted input costs. The conflict, which started with attacks on Iran on Feb 28 and subsequent strikes on oil infrastructure and the Strait of Hormuz, pushed the energy sector’s earnings outlook from a modest 2% gain to a -16.9% decline.

Consumer staples, discretionary, industrials, IT and financials also saw earnings forecasts fall between 100 and 500 basis points, while real-estate was upgraded to 28.1% growth. Uttam K Srimal of Axis Securities highlighted rising freight, metals, chemicals and rupee depreciation as key profit-and-loss pressures, prompting firms to cut costs or raise prices where possible. Amnish Aggarwal of PL Capital warned that higher food, fuel and durable-goods prices, together with rising interest rates, could curb domestic demand. Expectations for FY28 have improved, with financials, consumer discretionary and industrials expected to drive most of the incremental earnings between FY26 and FY28.