Five Indian stocks that could benefit from Trump’s tariffs on China

With China retaliating swiftly, slapping 15% tariffs on select US goods, the battle lines are once again drawn in a high-stakes economic standoff. But amid the turmoil, a new opportunity emerges for India—one that could shift global supply chains and strengthen its foothold in key US markets.

India, which directly competes with China in sectors like textiles, pharmaceuticals, and chemicals, stands to gain from this escalating conflict. History, too, backs this optimism—during the previous US-China trade war, India’s exports surged by a staggering 49% in just a year. As global businesses look for alternatives to Chinese suppliers, Indian firms are well-positioned to capitalise on this shift.

Here’s a closer look at five stocks that could benefit the most from this unfolding trade war.

Vardhman Textiles

Vardhman Textiles, the largest manufacturer of hand-knitting yarn in India, has a strong presence in India and in 60 countries across the globe including USA. It caters to several international brands such as GAP, H&M, Walmart, Calvin Klein, and Tommy Hilfiger.

The company earns around 43% of its revenue from its export business, of which the US market has a significant share.

With an already established presence in the US market, Trump’s tariffs on Chinese products could significantly benefit Vardhman Textiles.

This is primarily because higher tariffs could increase the cost of Chinese products in the US, thus making Indian textiles relatively cheaper. Moreover, India has the advantages of low cost production and abundance of skilled labour.

Vardhman Textiles have expanded their yarn capacity by 12% since 2022, with the new capacity fully operational by the end of FY24.

Now, it is investing about ₹25 billion in capex to increase its spindles capacity by 56,744 spindles. It is also setting up a biomass based boiler project to reduce its reliance on non-renewable energy sources and reduce its costs of production. With this enhanced capacity, the company will be able to ramp up its production quickly to meet the growing demand for Indian textiles.

Financials: Company’s revenue has grown at a compound annual growth rate (CAGR) of 7.1% on account of established relationships with clients growth across all its business segments over the last five years.

The net profit, however, grew marginally at 1.5% CAGR during the same period on account of volatility in the prices of raw materials.

However, with the demand for Indian textiles expected to go up, and the company’s increased manufacturing capacity, the revenue and net profit are expected to go up in the medium term.

Arvind

Arvind is India’s leading vertically integrated textile company and among the largest denim manufacturers in the world. Its product portfolio spans cotton shirts, denim, knits, khakis, jeans, and shirting garments.

India is a major exporter of textiles to the US and has exported garments and made-ups worth $7.5 billion in FY24.

The company also manufactures technical textiles that are useful in human protection, filtration, conveyor belting, automotive, and building and construction.

Arvind earns majority of its revenue from exports (51%) followed by India (49%). Some of its key markets are the US, UK, and EU.

In recent years, Arvind has seen a surge in business inquiries from international clients looking to shift their orders to India. This growing interest has not only expanded the company’s global customer base but also boosted its export revenue, solidifying its position as a key player in the international textile market.

A tariff on Chinese imports in the US will help Arvind grow its revenue and profits. This is because, the company already has an established presence in the US market and has long standing relationships with its US clients.

Moreover, compared to Chinese products, the company’s products will be relatively cheaper for US importers. This will help the company add new clients to its basket.

Financials: Arvind’s revenue has grown marginally at a CAGR of 1% in the last five years. This is because in FY24, exports declined due to high inflation.

However, with inflation coming down, the export revenue is expected to pick up. The same can be witnessed in the strong growth in the nine months of FY25 against the previous year.

Net profit grew at a strong CAGR of 30.2% despite high input costs due to the company’s ability to pass on the costs to its customers.

The company anticipates strong growth in exports and has been investing heavily in capex to expand its manufacturing capacity. For FY25, it has planned a capex of ₹4.5 billion for capacity expansion in garments and advanced material divisions and routine maintenance capex.

Given a strong shift in global supply chain from China and other countries to India with respect to textiles, the capex couldn’t have come at a better time.

Aurobindo Pharma

Aurobindo Pharma, India’s second-largest pharmaceutical company, is engaged in the manufacturing and marketing of APIs and generic pharmaceuticals.

Aurobindo Pharma has a strong presence in over 150 countries in the world with a strong presence in the US and European markets. It derives over 87% of its revenue from just these two markets.

Within the US, it earns 25% of the revenue from injectables, 64% from orals, 6.5% from branded oncology, and 4.5% from over-the-counter medicines.

Indian pharma exports stood at $27.9 billion in FY24, which was 10% higher than the previous year. With the US imposing tariffs on China, Indian pharma players like Aurobindo Pharma are most likely to benefit.

Ever since the pre-COVID era, the US has been focusing on phasing out its dependence on Chinese pharmaceutical imports. However, despite the country’s efforts, imports from China have consistently increased.

With a 10% tariff on imports, Chinese pharma products will become costlier for the US intermediaries, forcing them to look for alternatives.

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As Aurobindo Pharma already has a strong presence in the US, it will be easy for US intermediaries to switch to a different supplier.

Moreover, the company’s manufacturing facilities are all approved by the world’s regulatory bodies, including the US Food and Drug Administration (USFDA) and World Health Organisation (WHO).

The company also continuously invests in research and development (R&D) to enhance its product offerings. As of December 2024, it has 820 ANDAs (abbreviated new drug applications), 261 DMFs (drug master files), 792 patent applications with the USFDA, and over 4,164 dossiers across Europe and other geographies.

It plans to launch over 40 new products in the US market in the oral solid dosage (OSD) segment to further expand its product portfolio.

This shows the company is poised to grow revenues and profits from the US in the medium term.

Financials: In the last five years, the company witnessed a revenue, and profit growth of 4.7% and 2.2% respectively on account of sales growth across US and Europe geographies.

Sona BLW Precision Forgings

Sona BLW Precision Forgings is engaged in designing, manufacturing and supplying engineered automotive systems and components.

It has a diversified product portfolio consisting of precision forged bevel gears, differential assemblies, starter motors, traction motors, and intermediate gears.

It has a strong presence in India, US, and European markets and is a leading supplier to original equipment manufacturers (OEM).

The company derives around 44% of its revenue from the US market, and some of its key clients in this segment are General Motors, John Deere, and Ford.

Given that is has an established presence in the conventional vehicles, the company is now focussing on electric vehicles (EV).

In FY25, the company secured two new EV programs and expanded its customer base with two additional clients, bringing its total awarded programs to 56 across 32 customers.

With the US government pushing for increasing manufacturing within the US and tariff imposition on Chinese products, Sona BLW Precision stands to benefit as the company has long standing relationships with major car makers in the US.

Despite the Trump government’s plan to withdraw the 2030 EV target set by the Biden government, the company is set to witness a strong growth in the US as its gears and motors for the conventional vehicles are already a hit among its customers.

Expecting a strong increase in demand from all over the world, the company has already invested in capex to expand its manufacturing capacity. In 2024, it opened two new manufacturing facilities to produce differential assemblies and reduction gears.

It is also focussing on other geographies including UK and India by collaborating with technological partners to expand its product portfolio.

Financials: Sona BLW Precision has witnessed a strong growth in revenue and profits in the last five years on account of healthy growth in its order book, and customer additions.

The revenue and net profit have grown at a CAGR of 25.1% and 7.5%, respectively.

Tata Chemicals

Part of the Tata Group, the company manufactures and exports chemicals and speciality chemicals.

It has a diversified product portfolio, including soda ash, soda bicarbonate, cement, salt, marine chemicals, crushed refined soda, and agrochemicals.

The company has a strong market share in the global soda ash industry, with a presence in India, North America, Europe, and Africa.

Tata Chemicals supplies dense soda ash, natural light soda ash, and synthetic light soda ash to the US market and derives 34% of its revenue from it.

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With Trump imposing tariffs on Chinese products, India’s chemical sector is set to witness strong growth. This is because the US imports over 10% of its chemical needs from the China. With a 10% hike in tariffs the imports will become costly to US importers who will look for alternatives.

India being the sixth largest producer of chemicals will be a perfect substitute to China for US importers looking for low cost alternatives.

Tata Chemicals, being the third largest soda ash producer globally, the sixth largest producer of sodium bicarbonate in the world, and one of the leading agri-services and crop-protection chemical companies in India, will be a primary beneficiary.

The company already derives majority of its revenue from the US market which indicates it has established relationships with major importers. Hence adding new customers to its clientele in the US will not be a problem.

It has no major capex plans apart from the capacity expansion in inner Mongolia as it majorly operates through its subsidiaries and joint ventures across the world.

Financials: Tata group company’s revenue has grown at a CAGR of 8% in the last five years on account of stable demand across the world. The net profit, however, witnessed a decline on account of capacity expansion in one of its plants.

Apart from the above, here are some more companies from the textiles, pharma, auto components, and chemical industries, that derive majority of their revenue from the US market and could benefit from the traffic the US imposed on China.

• Raymond
• Welspun Living
• Bombay Dyeing
• Trident
• Sun Pharma
• Dr Reddy’s
• Samvardhana Motherson
• Aarti Industries
• SRF

Conclusion

Although the above mentioned companies stand to gain significantly from US tariffs on Chinese products, India isn’t entirely shielded from Washington’s protectionist stance. The US could impose tariffs on Indian goods as well, adding an element of uncertainty to the equation.

Also read: FPIs dumped Indian financial stocks in January. But not all is bad for the sector.

Given this unpredictable trade environment, investors must stay cautious and closely monitor evolving policies and potential risks. 

A well-informed approach—considering valuation, industry trends, corporate governance, and market dynamics—is crucial before making any investment decisions. Stay vigilant, stay informed, and invest wisely.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. 

This article is syndicated from Equitymaster.com