Sectors That Will Be Worst Hit Due To The Lockdown

Indian Prime Minister, Narendra Modi has extended the lockdown until May 3, 2020. Most corporates are likely to report poor numbers.

While Q4 numbers for FY 2020 are likely to be bad, the Q1 numbers for FY 2021 are likely to be even worse. Here are some sectors that could be hit badly due to the lockdown and where quarterly numbers are likely to be poor.

Automobiles

The numbers for the last few months from the auto sector have been bad, even before the lockdown. Numbers for April are likely to be disastrous, while there are hopes that the numbers may pick-up in the months later. However, monsoon means that the numbers for June and July too maybe bad. If infections from coronavirus abate in the next few months, there could be some good traction ahead of the festive season in August, Sept and Oct 2020.

Banking

The Banking and the NBFC sectors are almost certainly going to impacted negatively. There is likely to be some defaults from the corporate and retail side and NPAs are likely to swell in the coming quarters.

Smaller banks would find the going tough, as compared to players like ICICI Bank, HDFC Bank and State Bank of India, which might weather the storm rather well.

Oil and gas sector

Lower fuel sales due to the lockdown is likely to hit numbers. In fact, fuel demand is likely to slide in the month of April, given that the month will be seeing a complete lockdown. Oil and gas major like ONGC is already hit by crashing crude prices. Again, much hinges on recovery of fuel demand and recovery of crude prices.

Real and infrastructure

This is one sector that has a big battle on its hands. Some of these companies would have to pay for manpower, while business activity has come to a standstill. Several of these companies have dismal cashflows and are over leveraged.

This sector may take a long time for recovery.

Hospitality and tourism

This is another sector that has been badly hit. Hotels and restaurants remain close. Business has been badly impacted with virtually no revenues. It's going to be tough and for the smaller players, even survival is going to be challenging.

Consumer Goods

Some companies have already announced that there could be an impact on sales. With malls and shopping complexes are already seeing sharply lower footfalls, this is one sector that would be impacted. However, as and when infections abate, there could be a demand revival.