Kerala floods impact: stocks likely to be most impacted

Businesses are bound to take a hit in Kerala as flood waters recede. Companies that have a large presence in the state are likely to show impact in their Q2FY19 results.

Aug 24, 2018 02:08 IST IIFL Derivative Desk Raushan Kumar |

Kerala Flood
According to Government data, Kerala accounted for less than 5% of India's Population and is a highly consumption-oriented state. The state has been affected the worst flood it has witnessed in a 100 years. Companies that have a large presence in flood-affected areas are likely to take a hit in their results for the upcoming quarter. 
1. Ramco Cements: The company derives a majority of its business from Kerala and could be affected the most.
2. Marico: Kerala is one of the major states supplying the key raw material of copra, accounting for 30% of the company's supplies.
3. Muthoot Capital and Muthoot Finance: Muthoot Capital, with 650 branches and 45% of their two-wheeler loans from Kerala and Manappuram Finance, with 15% of its gold loan branches and 7% of MFI branches in Kerala, are expected to be adversely impacted.
4. MRF and Rubfila: Natural rubber is a key raw material for these companies and is mainly sourced from Kerala.
5. V-GUARD: The company is headquartered in Kerala, and over half its business is from southern states.
6. Sheela Foam: Coir, a key raw material largely procured from Kerala, could be in short supply affecting the production cycle of the company.
7. Federal Bank and South Indian Bank: The banks derive 34% and 41% of their loans, respectively, from Kerala.
8. UBL and United Spirits: On 16th August, the Finance Minister of Kerala announced a hike in excise duty on liquor to raise additional funds for flood relief, affecting profitability of these companies.
9. Other Companies that may be affected: Jyothy Laboratories, India Cements, Dalmia Bharat, New India Assurance, ICICI Lombard, and Apollo Tyres.

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