US-Iran conflict to hit Q4FY26 earnings, supply chain restoration may take 1-2 months: Report

NEW DELHI: The ongoing US-Iran conflict is expected to impact corporate earnings in the fourth quarter of FY2026, with the effect likely to extend into the first quarter of the next financial year, according to a report by Emkay Research.

The report stated that supply chain disruptions caused by the conflict will take time to normalise, even after the reopening of the Strait of Hormuz. “We expect some impact on 4QFY26 earnings, with a spillover to 1QFY27. Supply chains are likely to take 1-2M to normalize after the Strait of Hormuz reopens”, the report noted.

It added that damage to energy infrastructure in the Middle East could further delay the full normalisation of oil markets, prolonging the impact on businesses. According to the report, the overall earnings impact on the Nifty is estimated at around 1-2 per cent for FY27E. However, small and mid-cap (SMID) companies are likely to face relatively higher downgrades, although the impact is expected to remain limited to one to two quarters.

The report also highlighted that market estimates have not yet fully reflected the impact of the conflict. “Notably, the street is yet to react to the war, with both Nifty and broader market estimates unchanged in Mar-26,” it said.

Despite the ongoing uncertainty, global markets have shown signs of recovery. The report noted that global markets rallied, while crude oil prices declined sharply, with Brent crude falling by 12 per cent. This movement was driven by the United States’ decision to suspend airstrikes on Iran’s energy infrastructure, citing ongoing talks and the possibility of peace.

However, uncertainty remains as Iran has denied being in direct or indirect talks with the United States, even as US President Donald Trump claimed that “very good and productive conversations” are taking place. The report stated that although the Strait of Hormuz remains closed, the likelihood of peace appears high and is considered the base case scenario.

It added that such developments could be a strong positive for India, with expectations that the Nifty could rebound after a five per cent decline in the last three trading sessions. The report suggested that while the immediate impact of the conflict will be visible in near-term earnings, the broader effect may remain contained if the situation stabilises in the coming months. (ANI)