The recent leadership shift at InterGlobe Aviation, the parent company of IndiGo, has drawn considerable market attention. Pieter Elbers stepping down and Rahul Bhatia taking interim charge has raised questions about whether the stock could see a knee-jerk reaction that investors might use as a buying opportunity. However, according to Pankaj Pandey, Head Research, ICICIdirect.com, the aviation sector remains structurally challenging.
“Aviation is a difficult space to operate. Right from availability of aircraft, a number of things are required for this segment to do well,” Pandey said. “Along with that, you need currency to be stable because a lot of lease payments go. Similarly, aviation turbine fuel also needs to be rightly priced.”
He believes the stock could remain under pressure in the near term and suggests that investors may find better opportunities within the broader travel ecosystem. “What we like in travel and tourism is probably something like hotel stocks,” he noted, adding that even though these businesses may see “2% to 3% kind of lower growth” due to cancellations, they still offer more controllable operating variables compared with aviation companies.
Supply Chain Concerns Ripple Across Industries
Beyond aviation, supply chain disruptions are emerging as another area of concern. Bosch recently flagged force majeure risks linked to gas shortages and maritime constraints, raising fears that similar issues could spill over into other sectors.
Pandey believes such disruptions could have both immediate and secondary effects across industries. “Oh, absolutely. We would see a primary impact along with second order impact in number of sectors if this issue to persist for some period of time,” he said.
He highlighted sectors such as auto and tyres, which could feel the pinch if supply disruptions continue. Export-oriented companies may also face challenges. “You could have companies on the exporting side say, for example, Bajaj Auto typically does exports of 33 odd percent, so that can get impacted,” he explained.
Pandey pointed to the paint industry as an example of how geopolitical shocks can affect corporate margins. “When the Russia-Ukraine war broke out Asian Paints witness a margin compression of about 400 odd bps,” he said, noting that companies were eventually able to recover margins after taking price hikes.
Despite the risks, Pandey believes the current conflict may not drag on indefinitely. “At this point of time we are still not downgrading the stock because our sense is that this war is not going to last too long given the fact that it is going to pinch all the segments, all the major geographies including US,” he said.
Electronics Manufacturing May See a Turnaround
Another area investors are monitoring closely is the electronics manufacturing services (EMS) space, particularly after new policy developments and expectations around government incentives.
Pandey said the sector has struggled recently but could see fresh momentum from upcoming policy announcements. “Towards this month end we should hear something on the PLI 2.0,” he said, adding that the Indian Semiconductor Mission could also receive additional allocations.
Among the companies he favors is Dixon Technologies, which recently secured approval for a joint venture. “Our sense is that the JV approval what they have got probably could fetch revenues of about 3000 odd crores with a slightly better margin profile of 11 to 12 odd percent,” Pandey said, adding that he sees the stock reaching around ₹13,000.
He also remains positive on other players in the segment. “Same is the case with other players like say Kaynes or even Amber,” he noted, citing rising demand for cooling products due to higher temperatures. “Most of the worst is behind this segment and ideally things should incrementally start to improve.”
Energy Stocks Seen More as Trading Opportunities
Energy stocks have also been in focus amid geopolitical tensions in the Middle East and volatility in crude and gas prices. However, Pandey believes investors should approach the sector cautiously.
“Largely most of these energy plays are trading plays,” he said. “We would not want to chase it from a portfolio perspective.”
According to him, volume growth across upstream, downstream and gas-based companies is unlikely to be significant. While short-term spikes in refining margins or commodity prices could boost earnings temporarily, these moves may not translate into sustained investment opportunities.
Instead, he advises investors to watch sectors that are sensitive to energy costs. For instance, tile manufacturers have high exposure to industrial gas prices. “Every 5 impacts their EBITDA by 5 to 10 odd percent,” he said, indicating that sharp corrections in such stocks could present buying opportunities.
LPG Shortage Raises Questions for Food Delivery Platforms
Meanwhile, reports of LPG shortages affecting restaurants across parts of the country have raised concerns about possible knock-on effects for food delivery companies.
Pandey believes the situation is still evolving and its full impact remains uncertain. “At this point in time, we are not seeing that kind of impact,” he said, though he acknowledged that order volumes could decline if supply constraints persist.
The government has reportedly secured about one million tonnes of LPG imports expected to arrive later this month. Still, Pandey cautioned that sentiment around related sectors could remain fragile. “It is very much possible that we might see some kind of a negative rub off across segments which are going to get impacted because of LPG shortage,” he said.
IT Sector Faces Structural Questions
The information technology sector, which has already corrected sharply in recent months, is another area where investors are debating whether valuations have become attractive.
Pandey said the sector had earlier been considered a contrarian buying opportunity, but rapid advances in artificial intelligence could alter the long-term outlook. “With AI development it looks like that one-third of their revenues are going to get impacted,” he said.
As a result, growth projections that once appeared achievable are now uncertain. “The kind of recovery we were expecting that FY28 high single kind of a growth is a under question,” he explained.
While valuations appear appealing after roughly a 20% correction, Pandey believes the sector lacks near-term triggers. “We do not see that there are triggers in place for IT to do well for the next two-three years,” he said, adding that foreign portfolio investors have been consistently selling IT stocks.
Steel Producers Stand Out in Metals
Within the metals space, however, Pandey sees pockets of strength—particularly among ferrous steel producers.
“Our sense is that in the Q4 this ongoing quarter, we have already seen about 10% to 11% kind of appreciation in steel prices,” he said, which could boost profitability for steel companies despite higher input costs such as coking coal.
He expects most players to report improved EBITDA per tonne during the quarter. Among the beneficiaries, he highlighted Steel Authority of India Ltd (SAIL) as a standout pick. “The biggest beneficiary will be sail where we have a target price of 200,” he said.
Tata Steel is another company he prefers in the segment. On the other hand, he is more cautious on non-ferrous metals such as aluminium. Although aluminium prices have also risen about 10–11%, companies like Hindalco may not fully benefit because a large portion of their production is contracted at lower prices.
For investors navigating a volatile macro environment, the message appears clear: while certain sectors such as steel and electronics manufacturing may offer selective opportunities, others—including aviation, IT and energy—could remain challenged or better suited for short-term trades rather than long-term portfolio positions.
