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MUMBAI : The war in Ukraine has meant a rough ride for most Indian companies. But some are weathering the stormy markets relatively well with steel, aluminium, sugar and drug makers emerging as surprise winners.

Indian steelmakers, which have seen steady demand from western Europe, are benefiting from rising prices of the commodity.

Aluminium makers are also gaining from the disruption in supplies from Russia and Ukraine. Pharma companies are also expected to see a surge in sales in Russia as Western companies exit the sanctions-hit nation.

In addition, rising crude prices have shifted focus to ethanol, benefiting Indian sugar producers, analysts and fund managers said.

Metals are an obvious beneficiary from rising prices due to the conflict, while energy explorers and refiners will also benefit, said Nishit Master, portfolio manager, Axis Securities.

Master said the increasing use of ethanol, which is blended with auto fuels to reduce crude imports, would also benefit sugar producers.

The government’s ethanol blending programme is already helping sugar companies tide over a glut. Ethanol is made by fermenting sugar.

Vikram Kasat, head of advisory at Prabhudas Lilladher, said he’s bullish on the sugar sector. The surge in crude prices has led Brazil to focus on ethanol production, and the world sugar demand is flowing to India at a time ethanol blending programme in India is also progressing well, Kasat said.

Kasat also likes aluminium companies as Russia contributes 12% to global trade, and the sanctions on the country have squeezed supplies. The aluminium prices thereby might remain elevated.

Jatin Damania, vice-president of fundamental research at Kotak Securities, estimates a deficit of 1.8-1.9 million tonnes in 2022/23 versus earlier estimates of 1.3-1.5 million tonnes. He favours aluminium makers Hindalco and Nalco.

Meanwhile, Master also likes pharma companies with a presence in the speciality chemicals space.

Pharma companies such as Dr Reddy’s Laboratories, Glenmark Pharma and JB Chemicals have a sizable presence in Russia and other CIS (Commonwealth of Independent States) countries. Dr Reddy’s reported revenues of 470 crore from Russia in the December quarter. This was more than a tenth of the company’s global generic sales. Dr Reddy’s can see major gains accrue because of the exit of Western companies, increasing its growth opportunities, too.

“With the potential curtailment of business of its competitors (either voluntarily or through sanctions), Dr Reddy’s can increase its market share and raise prices, if required, to mitigate the currency devaluation risks post the hedging period," said analysts at Credit Suisse in their report dated 22 March.

“As of now, the company is not facing any challenges in dispatching manufactured products to Russia and realizing receivables for the same," they added.

While Dr Reddy’s is the key beneficiary, Lupin Cipla, Sun Pharma, Glenmark and JB Chemicals, which supply to Russia, will also benefit, an analyst at a domestic brokerage said, requesting anonymity.

Meanwhile, Indian steelmakers continue to benefit from reduced supplies from Russia-Ukraine, which account for 10% of global steel exports.

Mitul Shah, head of research at Reliance Securities, said that India accounted for 12% of European steel imports in 2021 and could gain market share in the region.

Tata Steel, JSW Steel and Jindal Steel and Power are among companies that could be significant beneficiaries.

Further, after the Russian invasion of Ukraine, global defence expenditure is also set to rise significantly, said Shah. As a result, he expects defence sector companies, including Larsen and Toubro, and Bharat Electronics, to do well.

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