The sharp volatility in crude prices have impacted the price of most everyday items like cooking oil, coffee and gold. Needless to mention the ripple effect is being felt through the stock market too. According to international brokerage house Nomura, these shifts could affect company margins, pricing strategies and even consumer demand in the coming quarters.
Changes in raw material prices are once again becoming a key factor to watch out for consumer goods companies. After several months of stability, prices of some important input materials such as crude oil and edible oil have started rising again, while others like coffee and wheat have softened.
Following this, Nomura has identified a select number of stocks that it believes may be better positioned to deal with this changing cost environment.
Let’s take a look at the stocks the brokerage house is bullish on and what is the rationale behind it –
FMCG picks: Nomura’s preferred stocks
The brokerage firm, Nomura has maintained a ‘Buy’ rating on several consumer sector stocks despite the changing raw material cost environment.
The brokerage remains optimistic on Nestle India, expecting a 16% upside from its current market price. For Britannia, the brokerage has set a target price of Rs 7,275, which indicates an upside potential of around 22% from the current market price.
In the case of Tata Consumer Products, the brokerage has assigned a target price of Rs 1,450, implying a potential upside of about 29%.For Marico, the target price has been pegged at Rs 900, suggesting a 15% upside from current levels.
Meanwhile, the brokerage is also bullish on Dabur, setting a target price of Rs 488, which translates into an upside potential of nearly 23% from the present market price. The brokerage believes these companies may manage cost pressures better due to pricing flexibility and diversified product portfolios.
However, other consumer companies including Godrej Consumer Products, Hindustan Unilever and Colgate-Palmolive (India) may face higher pressure if raw material prices continue to rise.Nomura said in its report that “while raw materials are turning inflationary again, demand recovery is still gradual and volume growth remains below pre-Covid levels.”
Crude oil and packaging costs are rising again
One of the biggest concerns highlighted in the report is the rise in crude oil prices. According to the brokerage report, “Brent crude prices rose sharply 13% quarter-on-quarter in the fourth quarter of financial year-to-date 2026.”
This rise has been largely linked to geopolitical tension in West Asia involving Iran, Israel and the United States. Higher crude oil prices can increase transportation and packaging costs for many consumer companies.
The brokerage also noted that “high-density polyethylene (HDPE) prices have risen around 5% month-on-month,” which could increase packaging expenses.
Edible oils and palm oil show inflation signals
Edible oil prices are another key factor to watch. Palm oil prices remained stable earlier in February but have recently turned inflationary. According to the brokerage report, “palm oil futures rose about 5% toward the end of February due to expectations of lower production in Malaysia.”
The report pointed out that severe flooding in Sabah, a major palm oil producing region, may reduce output. At the same time, global demand for palm oil may increase due to its price advantage over other edible oils.
Coffee, wheat and copra bring some relief
Not all raw materials are becoming expensive. The brokerage report highlighted that prices of some key commodities have actually declined.
According to the brokerage report, “robusta coffee prices have softened and are down around 28% year-on-year.”
Similarly, arabica coffee prices have also corrected sharply compared to earlier levels. This could benefit companies such as Nestle India that use coffee as a key ingredient.
Wheat prices have also moderated and are currently lower compared with last year. The brokerage noted that a better wheat harvest could support margins for food companies such as Britannia Industries, Nestle India and the foods business of ITC.
Copra prices, which are used in coconut-based products, have also fell from earlier highs. This may support margins and sales growth for Marico, which sells coconut oil products.
Gold prices surge amid the ongoing global uncertainty
The brokerage house also noted in its report the sharp rise in gold prices due to global economic uncertainty. According to the brokerage report, “gold prices are up about 23% quarter-on-quarter and nearly 85% year-on-year.”
Rising gold prices could affect demand for jewellery companies such as Titan Company. However, the brokerage noted that the ongoing wedding season may support demand in the near term. Nomura added that “there is some pre-ponement of demand in anticipation of further increase in gold prices.”
Why this inflation cycle may be different
According to Nomura, the impact of rising input costs may not follow the same pattern seen before the Covid-19 pandemic.
The brokerage noted in its report that “the earlier framework that inflation is positive for larger players may not fully work in the current environment.” One reason is that consumer demand is still recovering and companies may find it difficult to pass on higher costs through price increases. Another change in the market is the rise of digital-first and direct-to-consumer brands.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.