Why Did Blue Star, Voltas and Havells Stocks Rally Today? The Answer Starts in the Strait of Hormuz

A war started thousands of kilometres away. Here's how it's showing up in your stock portfolio, your restaurant bill, and your AC unit.

On the morning of March 25, 2026, a relatively small company filed a brief update to the stock exchanges.

PG Electroplast, an electronics manufacturing services firm most people outside the investment world have never heard of, said it had found an alternative to LPG at its production facilities. Room AC manufacturing, it said, had returned to "almost normalized" levels.

Within hours, Blue Star climbed 5%. Voltas jumped 4.5%. Havells rose 4.2%. PG Electroplast itself surged nearly 9%.

One filing. Four stocks. Significant single-day moves.

To understand why markets reacted so sharply to news from one mid-sized manufacturer, you need to go back to February 28. And you need to understand what LPG actually does inside an AC factory, because it has nothing to do with the gas that cools your room.

First, Let's Clear Up the Gas Confusion

When most people hear "LPG and air conditioners" in the same sentence, they assume we are talking about refrigerant, the gas inside the AC unit that actually cools the air. That gas, typically R-32 or R-410A, is a different substance entirely and comes largely from China.

The LPG we are talking about here is liquefied petroleum gas, the same propane-butane mix that goes into your kitchen cylinder. But inside an AC factory, it isn't used for cooling. It is used for brazing.

Brazing is the process of joining two metal components using a filler metal melted by a high-temperature flame. In AC manufacturing, the most critical brazing operation happens during heat exchanger assembly. The heat exchanger is the component inside your AC that actually transfers heat between the refrigerant and the air. It consists of copper tubes and aluminium fins that need to be joined with absolute precision. A bad braze joint means refrigerant leaks, which means a faulty unit.

LPG has been the fuel of choice for this process because it delivers consistent heat, allows precise temperature control, burns cleanly, and is economical at scale. According to a Nuvama Institutional Equities report, manufacturers rely heavily on LPG for heat exchanger brazing, which the research firm described as "a process widely considered the most efficient method for building air conditioning units."

So when LPG ran short, it wasn't a comfort problem. It was a manufacturing problem. Assembly lines stopped not because of missing parts, but because the fuel that joins those parts together was no longer arriving.

What Happened on February 28

American and Israeli strikes on Iran triggered a chain of events that would eventually reach those factory floors.

Tehran's response included closing the Strait of Hormuz, the roughly 39-kilometre waterway between Iran and Oman through which roughly 20% of global oil supplies and significant LNG volumes flow. The IEA called it the greatest global energy security challenge in history.

For India, the exposure was structural and immediate. India is the world's second-largest importer of LPG, consuming 31.3 million metric tonnes in financial year 2025. Roughly 60% of that is imported. And approximately 90% of those imports transit the Strait of Hormuz. India's strategic LPG storage, even after a new underground cavern was commissioned in Mangalore in mid-2025, stood at roughly 140,000 tonnes, equivalent to less than two days of national demand.

Since the start of the conflict on February 28, only two LPG vessels have been allowed through the strait. The taps, for practical purposes, had been turned off.

The government moved quickly. LPG prices were raised by Rs 60 per cylinder within days. On March 9, the Essential Commodities Act was invoked and a four-tier priority system was established: household cooking gas first, fertiliser plants second, industrial manufacturing third, commercial users last. That hierarchy would define which companies suffered and which were protected in the weeks that followed.

The AC Stocks: Four Weeks of Damage, One Morning of Relief

From February 27 through to the week of March 18, the damage in the consumer durables sector was significant and broad.

The Nifty Consumer Durables index fell 12.3% in this period, compared to the Nifty 50's decline of 10.5%. Within the sector, the AC-related names bore the heaviest load. Amber Enterprises and PG Electroplast both fell 21% between February 27 and mid-March. Voltas declined 20%. Blue Star dropped 16%. Havells fell 12%.

PG Electroplast was the most operationally exposed. The company's Supa facility in Maharashtra was partially shut down after its LPG supplier, citing the maritime navigation restrictions caused by the Middle East conflict, said it could no longer honour the Gas Sale and Purchase Agreement effective March 9. The company's northern facility continued operating, but at reduced overall output. March is not a month PG Electroplast can afford to lose. Its management had noted in an interview with CNBC-TV18 that March typically contributes around 12 to 15% of the company's annual sales. This is peak season. The AC industry's most important weeks of the year.

Bosch Home Solutions and E-Pack Durables also informed exchanges about production disruptions from the same LPG crunch. Analysts at Nuvama noted that companies located in Maharashtra witnessed the most material reduction in supplies. Piped natural gas supplies were also cut by around 20% from March 9, meaning even the alternatives were being rationed.

The inventory question became critical. Industry players were holding stock for 10 to 12 weeks at the brand and channel level. Analysts calculated that if the LPG crunch persisted beyond two weeks from March 9, it would start impacting the season, because it typically takes two to four weeks for products to reach retail touchpoints from the factory floor.

That two-week clock was ticking when PG Electroplast filed its March 25 update.

What PG Electroplast Actually Did

The company's exchange filing on March 25 said it had "identified and installed alternative solutions to LPG" at its production facilities. It did not specify the exact alternative.

But the broader industry picture, documented in the Nuvama report, fills in most of the answer. The alternative PG Electroplast and other manufacturers are switching to is oxy-acetylene, a combination of oxygen and acetylene gas that can reach higher flame temperatures than LPG and has long been used for industrial brazing and cutting. It was, in fact, the standard before LPG became dominant in appliance manufacturing due to its lower cost and safer handling profile.

The switch back to oxy-acetylene is possible but not frictionless. Oxy-acetylene production depends on crude-linked feedstock and limestone. Here is the uncomfortable part: approximately 96% of India's limestone imports originate from the Middle East. In switching away from one Middle East-dependent fuel, manufacturers are partially relying on another Middle East-linked input. The Nuvama report explicitly flagged this, noting that oxy-acetylene "is aiding continuity in production temporarily, albeit at higher costs."

The "temporarily" and "for the time being" language in PG Electroplast's own filing reflects exactly this reality. The company found a workaround. It is not a permanent fix.

Nuvama cut its FY26 earnings estimate for PG Electroplast by 14% and its FY27 estimate by 1% to account for the weak March quarter and the modest margin impact of using more expensive substitute fuel. Even after the March 25 rally of nearly 9%, PG Electroplast shares remain down 40% over the past one year.

The Gas Distribution Companies: Priced for a Long Crisis

While AC stocks fell because LPG disrupted their factories, the gas distribution companies fell because they are the supply chain itself.

From February 28 through to mid-March, Petronet LNG plunged 12%, GAIL fell 8%, Gujarat State Petronet declined 7%, and Mahanagar Gas, Indraprastha Gas, and Gujarat Gas each fell around 6%. The Nifty 50 fell roughly 5% in this same period, meaning the gas sector underperformed the broader market by a significant margin.

The Qatar dimension added another layer of fear. Qatar's Ras Laffan complex is one of the largest LNG export hubs in the world, handling around 20% of global LNG capacity. Reports of drone strikes on the facility rattled investors who were already pricing in a prolonged Hormuz disruption.

Gujarat Gas issued force majeure notices to industrial clients from March 9, restricting daily contracted quantities. Indraprastha Gas, which supplies piped gas to Delhi-NCR homes and CNG to vehicles, fell to Rs 160, sitting 30% below its 52-week high by mid-March. These are not stocks that had been flying high and corrected. These are companies that serve essential infrastructure, and they fell this sharply because the commodity flowing through their pipes had become unavailable.

There was a brief bounce on March 10 when President Trump said the war against Iran was "very complete" and signalled the US might assert control over the Strait. That day, Petronet LNG rose 5%, IGL climbed 5.8%, and GAIL gained 2.3%. The relief lasted about 48 hours before selling resumed.

As of March 25, analysts at Motilal Oswal maintain Buy ratings on IGL with a target price of Rs 235 against a current price of Rs 154, implying upside of around 52% if normalcy returns. HPCL carries a target price of Rs 600 against a current trading price of Rs 384. The gap between where these stocks are trading and where analysts believe they should be is essentially the market's estimate of how bad and how long the Hormuz disruption will be.

The Restaurant Stocks: Last in Line, First to Feel It

Being at the bottom of the government's four-tier priority framework meant restaurants received the sharpest cuts to their LPG allocation, up to 80% in the first weeks of the crisis.

Government data showed that Indian Oil, Hindustan Petroleum, and Bharat Petroleum together sold about 1.15 million metric tonnes of LPG in the first half of March 2026, which was 17.3% less than March 2025 and 26.3% less than the previous month. The household segment was being protected. Commercial kitchens were on their own.

For the listed QSR chains, the exposure varied by how much LPG they used and how much buffer stock they had built. Sapphire Foods, which operates KFC and Pizza Hut outlets, disclosed that 63% of its overall cooking relies on LPG, with only 7 to 8 days of buffer. Restaurant Brands, which operates Burger King India, had built a 2-week buffer but was considering dropping LPG-intensive menu items. Tandoori breads, dosas, slow-cooked gravies, and other high-flame dishes were being quietly removed from menus at some outlets to stretch available fuel.

Between February 27 and mid-March, Sapphire Foods fell 21% and Devyani International fell 19%. Jubilant FoodWorks, which operates Domino's, declined around 4% in the same period. Westlife FoodWorld slipped roughly 3%. Food delivery platforms Eternal and Swiggy fell up to 5.5% as investors priced in lower order volumes from disrupted restaurant kitchens.

Analysts at JM Financial put numbers to the operational risk: if restaurants dependent on LPG were forced to shut for even five days, revenue per store would decline by 6% for the quarter and restaurant-level EBITDA would fall by a far sharper 14 to 20%. The operating leverage that makes restaurant businesses attractive in good times runs hard in the other direction when the kitchen goes cold.

The Broader Collateral Damage

The crisis did not stay within its obvious lanes.

Ceramic manufacturers including Kajaria Ceramics, Somany Ceramics, and Cera Sanitaryware were all affected, since kilns that fire ceramic tiles require sustained high-temperature gas supply. Both Somany and Cera notified exchanges in early March that gas supply had been restricted to up to 50% of their contracted quantity. All three stocks declined between 8% and 12% in the two weeks from March 1 to March 15.

Jindal Stainless reported reduced operating rates at several plants due to shortages of industrial propane. The pharmaceutical sector flagged disruptions in raw material movement from China, with active pharmaceutical ingredient costs surging around 30% in just two weeks. Port and logistics stocks including Adani Ports and JSW Infrastructure declined up to 4% in early March as the Strait of Hormuz disruptions raised fears about shipping route costs and delays.

India's fertiliser sector, which relies on natural gas as a manufacturing feedstock, is under cost pressure as well. Fertiliser plants sit at priority tier two in the government's framework, so they are getting supply. But at prices materially higher than before the conflict. That cost will eventually find its way either into subsidy bills or into what farmers pay for inputs.

The Bigger Picture

Goldman Sachs has cut India's 2026 GDP growth forecast to 5.9%, with oil prices in the $105-$115 per barrel range cited as a key headwind. That is a macro headwind that hits consumer spending, including the kind of big-ticket discretionary purchase that an air conditioner represents.

HSBC's analysis suggests the growth impact is more pronounced than the inflation impact, since retail fuel prices remain controlled and public sector oil companies are absorbing much of the commodity cost. HSBC estimates the burden split at roughly 70% for consumers and 30% for corporates.

But the deeper lesson from this episode is structural. India's manufacturing ambitions, from PLI schemes to Make in India, rest on supply chains that remain deeply exposed to commodity markets shaped by geopolitics thousands of kilometres away. LPG travels through the Strait of Hormuz. Limestone for oxy-acetylene comes from the Middle East. Refrigerant comes from China. The inputs for making an Indian AC are spread across supply chains that India does not control.

PG Electroplast's pivot to oxy-acetylene is genuinely resourceful. But as one reader of the Nuvama report noted in an online forum: "We're just trading one vulnerability for another."

Where Things Stand on March 25

The March 25 rally across AC stocks was real but narrow in context. Blue Star at Rs 1,747 remains 16% below where it was on February 27. Voltas at Rs 1,360 is still 20% off its pre-war levels. Havells at Rs 1,286 is down 12% from February 27 and more than 23% below its 52-week high. PG Electroplast, up 9% on the day, is still 40% below where it was a year ago.

The stocks moved on March 25 because one key supplier said production is almost back. Almost. For now. The caveats are doing a lot of work in that sentence.

Whether the full recovery happens depends on how long the Strait of Hormuz remains disrupted, whether oxy-acetylene supply holds up, and whether India's LPG import infrastructure can find alternative routes fast enough to matter this season.

For now, every company that runs on gas is watching one narrow waterway between Iran and Oman more closely than any analyst report.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.