Shares of India’s food delivery platforms and restaurant operators tumbled as the escalating war in Iran led to LPG shortages, paralyzing the $335 billion food and beverage industry.
Zomato parent company Eternal Ltd fell as much as 4.8% in Mumbai trading, while Swiggy Ltd hit a record low as investors priced in a sharp decline in order volumes. The selling extended to fast-food companies like Jubilant Foodworks Ltd, which operates Domino’s Pizza in India, as the sector grapples with a severe shortage of LPG to keep commercial kitchens running.
LPG shortage in India
The crisis has stemmed from disruptions in West Asia, a region that provides more than half of India’s LPG imports. The closure of key maritime chokepoints, including the Strait of Hormuz, following tensions between Israel-US and Iran has caused severe disruption to logistics.
With tankers unable to pass through the corridor, Indian hospitality bodies in major centers such as Mumbai, Bengaluru and Chennai have warned that up to 50% of restaurants could be forced to close within days. Already, some establishments have begun reducing hours of operation and removing “slow-cooking” items from menus to conserve dwindling inventory.
“Reduced menus, limited cooking hours at some restaurants, or temporarily closed kitchens may limit the availability of orders on platforms, leading to a temporary decline in fourth quarter food delivery order volume,” Motilal Oswal analysts, including Abhishek Pathak, wrote in a research note.
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TTK Prestige, Stove Craft emerge as outliers
While the delivery and restaurant sectors have declined, the LPG shortage in India has created a windfall for manufacturers of electrical appliances. Panic buying has hit Indian households and small eateries, leading to a huge increase in demand for induction cooktops and pressure cookers.
Shares of TTK Prestige Ltd rose 15% on Thursday, taking its three-day gain to nearly 30%. Stove Craft Ltd. also advanced 12%. Instant-commerce platforms like Blinkit and Zepto have reported that induction stoves are selling out in minutes as consumers look for ways to bypass the gas-dependent supply chain.
LPG cylinder price increase, new policy
In an effort to manage the LPG shortage, the central government has invoked the Essential Commodities Act, 1955, ordering domestic refineries to prioritize LPG production for households over industry. However, this has led to a further reduction in “commercial” LPG supplies used by the hospitality industry.
On Saturday, India raised LPG cylinder prices for the first time in almost a year, increasing rates by 7% ₹913. Commercial rates – which are typically more volatile – were raised for the second time this month, adding to the burden of inflation on a sector already struggling with supply constraints.
CLSA analysts said that although the government is struggling to find alternative suppliers, significant relief may not come until the end of April. For Swiggy and Eternal, which rely on a frictionless ecosystem of thousands of operational kitchens, the coming weeks represent a crucial test of resilience in the face of geopolitical instability.