Nepal conceded two goals in the first half and three more goals after the interval. Five different players were on target for physically superior home team.
Glovesman Bikesh Kuthu saved as many as half a dozen shots from Iran.
Iran took the lead in the 14th minute when Arsalan Motahhari taking advantage of unmanaged Nepali defense.
Behnam Barzay doubled the advantage from the spot after Gaurab Budhathoki fouled Irani player inside the zone.
Home team came up with more confident show after going into second half with 2-0 lead. Nepali players hardly reached the opponent's danger zone throughout the match.
Sardar Azmoun made it 3-0 through header in the 54th minute and Ali Karimi added another in the 67th. Nepal remained busy in preventing the oppositions from scoring further goals and also shot twice in the Iran's post, but both off the target.
Finally Shahin Saghebi sealed the victory with fifth goal three minutes from time.
Following the big margin defeat, Nepal's coach Jack Stefanowski said that Iran was superior to Nepal both physically and technically.
"Iran played good football and it is favorite from the group".
He however was optimistic of recovering from the defeat and qualifying for the next round.
Nepal will face Afghanistan in second match at the same venue on Wednesday (March 25).
Meanwhile, Nepali players' jersey numbers did not correspond to the players' list provided by the AFC due to the carelessness of the team management. That forced the Nepali officials to use medical tape to hide the numbers and write new ones to the amusement of the spectators.
When asked by the local journalists about the jersey of Nepal, coach Stefanowski said that the incident happened due to miscommunication.
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