Sugar prices have surged, and Goldman Sachs assesses that Britannia will face the biggest impact among Indian consumer stocks as a result.

According to the brokerage, Britannia has a relatively high dependence on sugar and palm oil as a proportion of its input costs. In addition, the company's large share of price-point packs could make it harder for it to fully pass on higher costs to consumers.

Nestle India and Varun Beverages are also likely to see some impact from the rise in sugar prices. However, Goldman Sachs believes the effect could be better mitigated in the case of these two companies.

For context, sugar is a key input for India's packaged food and beverage industry, and sharp moves in commodity costs directly affect the margins of companies in this sector. India is the world's largest sugar consumer and among its largest producers, so domestic sugar availability and pricing shape input costs for biscuits, confectionery, and beverages makers alike. Price-point packs, which are products sold at fixed low retail prices, are common in India's FMCG market and limit producers' flexibility to adjust pack sizes or prices in response to input-cost inflation. When input costs rise, companies selling such packs typically either reduce grammage or absorb the increase, both of which pressure margins rather than price realization.

For companies like Britannia, the combined movement of sugar and palm oil is particularly consequential because both are major inputs for biscuits, its core category. Investors tracking these names will be watching upcoming quarterly results and management commentary for how gross margins respond to the commodity cycle and whether pricing or cost measures are announced.

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Source: CNBC-TV18