Higher fuel costs and supply chain pressures are among the challenges facing businesses

Mid-sized businesses across the South West are reducing or pausing investment amid the global political uncertainty being caused by the Middle East conflict, according to new research.

Nearly three quarters of the businesses questioned in the survey by advisory firm BDO said supply chain pressures and higher energy and fuel costs were among the biggest challenges they faced.

The bi-monthly survey of companies with revenues of between £10m and £500m found material delays and costs, stock shortages and suppliers folding were a top concern for more than half (51 per cent) of leaders in the region.

Nearly three in five (59 per cent)of South West firms questioned said they intended to halt or reduce investment as they waited for the situation in the Middle East to stabilise.

As a result, the region’s companies are considering steps such as increasing customer costs (46 per cent) and reducing or not paying a bonus (46 per cent), BDO said.

More than two-fifths of the region’s business leaders are also looking to prioritise UK-based suppliers (41 per cent), and a further 36 per cent are considering onshoring or nearshoring, in a move that could provide a boost to South West manufacturing.

Andrea Bishop, regional managing partner at BDO in the South West, said: “The mid-market is vital to the South West and wider UK growth. Instead of focusing their sights on expansion, they are struggling to absorb the latest economic shock in an uncertain global and political backdrop.

“Mounting pressures around energy, fuel costs and supply chains, which were issues affecting businesses even before the conflict in Iran, are only adding to the sustained feeling of uncertainty amongst regional business leaders.”

According to BDO, South West business leaders are looking to the government for extra support in case of further escalation. Popular policy or support measures for the next 12 months include transport and fuel cost relief; measures to reduce employment costs; and dedicated supply disruption support such as grants for businesses materially impacted.

“The government must ensure it listens to the wants and needs of South West business leaders in this crucial segment,” Ms Bishop added.

“Addressing these challenges head on could be the key to providing the stability needed to reignite the region’s economic growth.”

Rachel Reeves has agreed to proposals by mayor Helen Godwin announced at UKREiif

The chancellor has backed new plans to create a mayoral development zone across north Bristol and South Gloucestershire after admitting the West Country has “had its potential held back” for “too long”.

Rachel Reeves made the comments at UK regeneration summit UKREiiF as the West of England mayor set out major proposals to grow the local economy and tackle the housing crisis by building tens of thousands of homes.

Mayoral development zones identify places with substantial growth potential and can be followed by the establishment of mayoral development corporations (MDCs) – statutory bodies set up by regional mayors to deliver regeneration and development in their areas.

There are currently nine MDCs in other parts of the country, including the London Legacy Development Corporation, which has overseen the regeneration of Stratford following the 2012 London Olympic Games, delivering 12,000 new homes.

The South West zone would cover the region’s emerging new town – Brabazon – and the West Innovation Arc, in South Gloucestershire and north Bristol.

“For too long the West of England has been denied investment,” the chancellor said.

“That’s why alongside mayor Helen Godwin, we’re backing a new mayoral development zone, meaning new homes and better transport links, boosting the region’s economy and giving the West of England an ambitious vision for the future.”

Ms Godwin has been banging the drum for the South West at the Leeds-based conference this week amid the publication of a new £17bn investment prospectus for the region.

“It’s time to make the most of devolution and more quickly deliver the right homes in the right places, to help tackle the housing crisis,” she said.

“Our region’s first mayoral development zone designation will be a major moment in making that vision a reality, and realising our enormous and exciting further potential as a place.”

The announcement comes just weeks after the English Devolution and Community Empowerment Act became law, and as the region’s political leaders look to use what powers they have to grow the West’s economy.

According to the West of England Combined Authority (Weca) any MDC would be developed through significant local and political engagement.

“We have so much to be proud of across the area shortlisted to become one of the government’s new towns, with our new Bristol Brabazon train station opening later this year ahead of the new Aviva Arena,” Ms Godwin said.

“Working together, this part of the West of England – with the right transport investment to connect the Science Park, Bristol Parkway station, and Brabazon – can deliver 40,000 new homes and the same number of new jobs over the longer-term.”

Housing secretary Steve Reed said the region’s first mayoral development zone would make “a huge difference” to people’s lives.

“It means working families across the West of England can truly benefit from real change – with thousands more affordable homes, well-paid jobs and greater transport links between communities,” he said.

When Bristol Brabazon train station opens this year, it will strengthen the connections between the West Innovation Arc growth zone and the Central Bristol and Bath growth zone’s Bristol Temple Quarter and Bath Riverside Innovation District.

Maggie Tyrrell, leader of South Gloucestershire Council, said the non-statutory designation presented “a real opportunity” to focus significant investment in homes, jobs, transport and other infrastructure.

“However, it will be vital that this is delivered in close partnership with the council and our communities, with the right infrastructure, strong local input, and clear governance,” she said.

With nearly £1bn already invested in Brabazon as part of its multi-billion-pound planned investment to transform the former Filton Airfield, YTL UK Group has secured planning permission for 6,500 new homes, three new schools and a major park, where more than 500 residents have already moved in.

Colin Skellett, chief executive of YTL UK Group, added: “We welcome the announcement of the MDZ as this will be key to unlocking the wider investment in the West Innovation Arc.

“Brabazon is fast becoming the most exciting multi-purpose destination in the West.”

This week, Bromford Flagship LiveWest (BFL) – a UK provider of affordable homes – and YTL Developments unveiled a new strategic partnership.

Robert Nettleton, chief executive of BFL, said: “Brabazon and the West Innovation Arc has enormous potential and demonstrates what can be achieved when regional leaders and housing providers work together around a shared vision for long-term growth.”

The news of the MDZ follows South Gloucestershire Council discussing the potential options to support the delivery of the emerging new town earlier in May, and comes ahead of an item at the mayor and council leaders’ next meeting on June 5.

Life Insurance Corporation of India (LIC) shares rose around 5% on Friday after the state-run insurer announced its results, declared its first-ever 1:1 bonus issue and a dividend of Rs 10 per share, triggering bullish calls from brokerages.

LIC on Thursday reported a consolidated net profit of Rs 23,467 crore for the fourth quarter of FY26, marking a 23% year-on-year (YoY) rise from the Rs 19,039 crore profit reported in the corresponding quarter of the previous financial year. The firm’s net premium income, meanwhile, rose 12% YoY to Rs 1.65 lakh crore for the quarter under review against Rs 1.48 lakh crore a year earlier.

For the financial year ended March 31, 2026, LIC reported a more than 5% rise in assets under management (AUM) to Rs 57.29 lakh crore, while net profit increased over 19% year-on-year to Rs 57,419 crore.

As part of the bonus issue, LIC will issue one new fully paid-up equity share of Rs 10 each for every one existing fully paid-up equity share of Rs 10 each. May 29 has been fixed as the record date for determining shareholder eligibility. Meanwhile, the record date for the final dividend of Rs 10 for FY26 has been set as June 25.

Citi on LIC share price

Citi has a ‘Buy’ call on LIC, with a target price of Rs 1,475 apiece, implying an upside potential of more than 84% from the stock’s previous closing price of Rs 800 apiece on NSE.

The global brokerage said the insurer reported strong operational performance in Q4, driven by a 690 bps year-on-year expansion in VNB margin, beating estimates. The improvement was aided by a higher non-par mix and favourable yield curve benefits in the rapidly growing non-par book. It added that the management highlighted efforts to sustainably improve persistency, drive product innovation, enhance productivity of existing agents, expand the agent base and increase business through non-agency channels.
Valuation remains attractive, with projected FY27 core EV (excluding MTM EV) exceeding the current market value, Citi said. However, it added that visibility on the promoter holding structure remains a key overhang, even as operational performance stays strong.

Bernstein on LIC share price

Bernstein maintained a ‘Market Perform’ rating on LIC shares, with a target price of Rs 900 apiece, implying an upside potential of more than 12%.
The international brokerage said the insurer reported healthy revenue growth in Q4. New sales grew 22% in the quarter and 18% year-on-year in FY26, driven by strong non-par sales. It added that the insurer continued to see margin improvement in FY26, aided by a shift in product mix towards non-par products and favourable yield curve movements.

The brokerage further said the company’s management indicated that margins could converge with those of private peers over the medium term, although it acknowledged that the process would be gradual.

JM Financial on LIC

JM Financial maintained a ‘Buy’ rating on LIC shares and raised its target price to Rs 960 apiece.

“We had upgraded the stock after Q1FY26, expecting it to rerate with growth in 2H. A diversifying product mix with improving margins augurs well for LIC, providing resilience to growth. The stock has remained range-bound as weak markets ensured that EV remained below Sep’24 levels. As macro conditions improve, EV is expected to grow going forward, alongside an improving growth profile, with an unwind of 9%+ and VNB at 2% of opening EV,” JM Financial said, while upgrading its earnings estimates for the state-run insurer.

LIC share price

LIC shares jumped 5% to trade at Rs 839 apiece on the NSE on Friday. Shares of the state-run insurer have declined 2% over the past month, 6% so far in 2026 and 5% over the past year. However, the stock has gained 39% over the last three years.

The company had a market capitalisation of Rs 5.08 lakh crore at the end of the previous session.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

At a time when global uncertainty continues to keep investors on edge, market participants are trying to identify sectors that can withstand volatility while still offering long-term growth. Speaking to ET Now, Aditya Shah, Founder, Hercules Advisors shared his views on sectors ranging from power and real estate to EMS and quick commerce, while also highlighting areas where investors should remain cautious.

Power Sector Emerges as a Strong Bet

While energy stocks have been witnessing sharp swings due to fluctuating crude oil prices and geopolitical tensions, Shah believes investors should focus more on the power segment rather than the broader energy basket.

“So, I do not have a lot of positive view on the energy basket. It is really very volatile. So, I would tend to look at the power sector. The power sector will continue to do extremely well,” he said.

Among his preferred picks, Shah highlighted Indian Energy Exchange, commonly known as IEX. Despite concerns around market coupling, he believes the company remains structurally strong.

“IEX is one of my top picks. Even though it is entangled in the market coupling scenario, even if the market coupling comes in, IEX will continue to do extremely well.”
He also pointed to companies such as TD Power Systems and Genus Power Infrastructures as strong performers within the broader power ecosystem. According to Shah, capital goods and power remain among the most promising themes in the current market setup.
Banking, Chemicals and IT Offer Long-Term Opportunity
Addressing concerns around geopolitical uncertainty and fresh capital deployment, Shah reminded investors that equities inherently carry risk, but added that valuations in several sectors have become more attractive after the recent correction. “So, equity is never a safe bet. Equity has risk that is why it has got returns.”
He believes the microfinance space could perform well over the next one to two years, provided global tensions ease and markets regain stability.

“If you look at the banking and the financial services, there I think the microfinance sector will continue to do extremely well over the period of next one or two years provided this war gets solved.”

Shah also maintained his positive stance on private sector banks, calling them reliable options for stable returns. Beyond financials, he sees value emerging in the chemical sector after a prolonged correction.

“Chemical sector has taken a lot of beating. A lot of stocks are now available at 20-25 times multiple, that also you can look at.”

The IT sector, according to him, remains an important contrarian opportunity despite concerns around artificial intelligence disrupting traditional business models.

“Some of the largecap IT stocks continue to trade at about 15-16 times multiple with a good dividend yield of about 3% to 4%.”

He acknowledged that AI could pose challenges for IT companies in the future, but said valuations are now turning increasingly compelling for long-term investors.

Realty Continues to Remain in Favour
On the real estate sector, Shah expressed confidence despite recent volatility in property stocks. He believes premium developers and real estate ancillary businesses are well-positioned to benefit from sustained demand.

“So yes, the real estate sector, we are positive on the entire sector.”

He specifically mentioned Godrej Properties, citing its expansion plans in Mumbai and Bengaluru as key growth drivers.

“Godrej Properties, its expansion in Bombay as well as Bangalore they will continue to do exceptionally well.”

Shah also noted that some developers are exploring opportunities in data centres, which could open up an additional growth avenue for the sector in the coming years.

EMS Sector Faces Valuation Concerns
The electronic manufacturing services (EMS) segment, once among the market’s hottest themes, has seen significant pressure after disappointing earnings from several companies. Shah believes excessive valuations are now correcting.

“So, specifically, some stocks which were really very highly valued have got beaten down very badly.” Referring to Kaynes Technology India, he pointed out concerns around missed revenue and cash flow guidance.

“They have missed the cash flow guidance. They have missed the revenue guidance as well and they are now being cautious.”

According to Shah, while revenue misses can sometimes be overlooked, weak cash flow execution is a much bigger concern.

“Missing the revenue can be understood, but missing the cash flow is a really big blunder from the management.”

He cautioned investors against chasing EMS companies trading at extremely rich valuations of 60 to 80 times earnings. However, he added that the sector could once again become attractive if valuations correct further over time.

Quick Commerce Battle Intensifies
The conversation also turned to the rapidly evolving quick commerce industry, especially with Zepto preparing to enter the listed space alongside existing players like Blinkit and Swiggy.

Shah said the sector remains highly competitive, where disciplined execution and controlled cash burn will determine long-term winners.

“Those players who are intensely disciplined are going to survive, are going to make hay when profitability comes in.”

He praised Eternal for Blinkit’s operational discipline, particularly in dark store expansion and managing profitability.

“Zomato on the other hand has 60% to 70% of its revenue now coming in from Blinkit and is extremely disciplined about how to open dark stores and how to expand.”

At the same time, he described Zepto as highly aggressive in customer acquisition and discounting strategies, which could intensify competition across the sector. “Zepto on the other hand is really very aggressive with respect to discounting.”

Shah believes the player capable of balancing growth with profitability will eventually dominate the market.

“Right now I feel it will be Blinkit. Blinkit is doing exceptionally well.”

He also advised investors to keep an eye on Swiggy from a valuation perspective, even though profitability challenges persist.

As markets continue to react to global developments, Shah’s outlook reflects a cautious but selective optimism — favouring sectors with structural demand, reasonable valuations and disciplined management execution.