The ousting of Sheikh Hasina as Bangladesh’s Prime Minister following violent protests over job quotas has created significant political and economic uncertainty. This crisis not only poses security risks in the region but also has substantial ramifications for Indian companies with operations in Bangladesh. Many of these companies are listed on stock exchanges, and the turmoil has already impacted their stock prices.
Key Indian Companies Affected
- Marico (Saffola Edible Oil)
- Impact: Shares fell over 4% due to potential disruptions in sales, as Bangladesh accounts for around 11-12% of its revenue.
- Pearl Global Industries
- Impact: Shares dropped over 3%. The company derives about one-fourth of its revenue from Bangladesh, where its facilities are currently non-operational due to curfews.
- Emami
- Impact: Shares decreased by over 4%.
- Bayer CropScience
- Potential Impact: Has business interests in Bangladesh.
- Godrej Consumer Products Limited (GCPL)
- Potential Impact: Significant presence in Bangladesh.
- Britannia Industries
- Potential Impact: Operations in Bangladesh.
- Vikas Lifecare
- Potential Impact: Business exposure in Bangladesh.
- Dabur
- Potential Impact: Notable operations in Bangladesh.
- Asian Paints
- Potential Impact: Substantial business interests in Bangladesh.
- Pidilite Industries
- Potential Impact: Significant operations in Bangladesh.
- Jubilant FoodWorks
- Potential Impact: Presence in the region.
- Bajaj Auto
- Potential Impact: Business exposure in Bangladesh.
Additional Impact on Supply Chains
- Yarn Exporters:
- Bangladesh is a major customer for Indian yarn exports, accounting for 25-30% of the market. Disruptions could significantly impact exporters like Trent, PDS, and VIP Industries.
Market Reactions and Expert Opinions
- Vikram Kasat, Head of Advisory at Prabhudas Lilladher:
- Expressed concerns over the stability of Indian corporates operating in Bangladesh, citing notable companies like VIP, Emami, Marico, Dabur, Asian Paints, Pidilite, Tata Motors, and Hero MotoCorp.
- Neeraj Jain, Joint Managing Director of Vardhman Textiles:
- Highlighted that while the immediate impact on demand is minimal, prolonged unrest could become a significant concern.
- Hemang Jani, Market Expert:
- Suggested that meaningful corrections in stocks like VIP or Marico, which have strong linkages to Bangladesh, might present buying opportunities.
Opportunities Amidst Crisis
While the crisis poses challenges, it also presents opportunities for Indian textile and garment manufacturers to capture increased market share. The stock market has already responded positively to this potential:
- Gokaldas Exports: Shares surged by 18%.
- KPR Mill: Shares increased by 16%.
- Arvind Ltd: Shares rose by 11%.
- SP Apparels: Shares jumped by 18%.
- Century Enka: Shares went up by 20%.
- Kitex Garments: Shares climbed by 16%.
- Nahar Spinning: Shares grew by 14%.
Conclusion
The political turmoil in Bangladesh has created a challenging environment for Indian companies with operations in the country. The impact on stock prices reflects the market’s immediate reaction to the uncertainty. However, this crisis also presents an opportunity for Indian manufacturers to expand their market presence. The situation remains dynamic, and the long-term effects will depend on how quickly stability can be restored in Bangladesh.
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