Easing Commodity and Freight Costs May Lift Industrial Equipment Manufacturers' Margins: Jefferies

New Delhi, Nov 14 (KNN) India's industrial equipment manufacturers could see a recovery in profit margins in the coming quarters as raw material prices and freight costs moderate, according to a report by Jefferies.

The report said crude oil prices and freight rates had surged 29 per cent and 131 per cent, respectively, since March 1, 2026, amid US-Israel-Iran tensions. However, crude oil prices declined 10 per cent after the US mid-term elections, while other commodity and freight prices stabilised or eased, ANI reported.

Jefferies expects lower input and logistics costs to support manufacturers, particularly in the generator-set (genset) segment, where margins could recover faster than expected.

Genset Manufacturers Face Margin Recovery

India's genset industry is relatively consolidated, with three players accounting for 50-80 per cent of the medium- to high-horsepower segment, the report noted.

Manufacturers passed on 30-50 per cent price increases to customers for engine upgrades during FY24-FY26. However, rising commodity and logistics costs reduced their margins by 418-506 basis points year-on-year in the first half of FY27.

Jefferies expects margins to improve through earlier price increases, easing commodity costs and higher export revenues as freight rates stabilise.

Input Costs and Rupee Depreciation

Since March 1, 2026, steel prices have risen 18 per cent and copper prices 4 per cent, while aluminium prices have declined 1 per cent. A 3 per cent depreciation of the rupee against the US dollar has added to manufacturers' cost pressures.

Higher crude prices have also affected the cost and availability of petroleum-based inputs, including PVC and plastics. Meanwhile, elevated freight rates have increased the cost of imported components and weighed on export revenues.

The report identified further moderation in raw material and logistics costs as a key potential positive for India's industrial equipment sector.

(KNN Bureau)