Goldman Sachs has turned cautious on India’s consumer outlook, citing elevated crude prices and gas supply disruptions as growing headwinds for corporate earnings and economic growth. With Brent crude hovering about 40 per cent above the FY26 year‑to‑date average, the brokerage has revised its CY26 crude forecast to USD 77 per barrel and trimmed India’s GDP growth estimate by around 50 basis points. The impact is expected to be uneven across sectors, with FMCG, paints, and quick‑service restaurants (QSRs) facing rising input costs, pricing pressures, and operational challenges heading into late FY26 and early FY27.
Although, as per recent statements, organised restaurant chains have enough LPG stocks to last between seven and 15 days, offering temporary relief if supply constraints persist. The picture, however, is uneven across the industry. Chain‑level exposure to LPG varies widely. McDonald’s and Burger King are among the least affected, with nearly 80–85 per cent of their operations powered by electricity. KFC follows a hybrid model, using a mix of LPG and electric cooking systems.
Domino’s India, operated by Jubilant FoodWorks, stands out as the most vulnerable among large players, as it relies heavily on LPG for its kitchens, with only around 10 per cent of its operations electrified.
Goldman Sachs on India Consumer
- Higher crude and gas shortages are impacting consumer earnings
- Brent about 40 per cent above the FY26 YTD average
- Goldman Sachs CY26 crude forecast revised to USD 77
- India GDP growth estimate cut about 50 bps
- Pidilite and Asian Paints are the most exposed to crude derivatives
- HUL is facing moderate input cost pressure
- Price hikes likely across FMCG companies
- Asian Paints margins may face competitive pressure
- QSR chains are facing LPG shortages and operational disruptions
- Goldman Sachs cuts QSR estimates for late FY26 and early FY27
The oil price (Brent) has shot up beyond USD100 per barrel after significant disruptions to traffic through the Strait of Hormuz. The last time oil prices surged past USD100 per barrel was in 2022 following the start of the Russia-Ukraine conflict. The current geopolitical escalation is more concerning as the SoH accounts for 20-25 per cent of global trade in oil and LNG versus Russian supplies of 8-10 per cent, Nomura noted earlier.
“A sustainably higher O&G price environment will adversely impact a fledgling growth recovery, drive inflation higher and strain external balance. We estimate that for crude oil prices upto USD 90 per barrel, the impact may largely be borne by oil companies and the government. Any incremental burden beyond this level will be passed on to consumers through higher fuel prices,” the brokerage said.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money related decisions.)
