Aniket PujariAfter the goods and services tax, or GST, rate on cement was rationalized in September, cement companies have refrained from raising prices to pass on the benefit of lower taxes to consumers, analysts said. Instead, some are relying on premiumization to protect profitability amid heightened competition.
India’s cement market has a concentrated structure with the top four companies accounting for a 60% share of the industry’s annual production capacity and top nine holding 81%, per brokerage Systematix Institutional Equities. Nuvoco Vistas, Birla Corp. and JK Lakshmi Cement, which together account for about 9% of the industry’s 688-million tonnes capacity, are among the top-nine cohort.
“We have very ambitious plans to increase premiumization, and this should improve realizations going forward,” Nuvoco Vistas’s managing director Jayakumar Krishnaswamy told analysts during a post-earnings call in November.
Nuvoco Vistas reported a record premium mix of 44% of volumes in Q2 FY26, up from around 41% in the first quarter, and plans to raise this further by 1.5-2 percentage points in the coming quarters, Krishnaswamy had said. The company expects a ₹25-50 per tonne improvement in net realization through internal initiatives such as shifting volumes toward states where prices and margins are better and pushing more of its premium brands. These high-margin markets for the company include Rajasthan, Chhattisgarh and Haryana.
Realization is the net revenue a company earns on average per tonne of cement sold.
Krishnaswamy said that it will be difficult to increase prices post GST reduction because they “are morally obligated not to tinker with prices in the short run”.
According to a 5 November note by B&K Securities, most dealers indicated that price hikes are unlikely in the near-term and depending on demand recovery, potential revisions are expected only from January 2026. Demand is expected to pick up mid-November.
Nuvoco aims to grow sales of its premium brands one-fifth in Q3 over Q2 and another 10% in Q4 over Q3.
Trend elsewhere, too
A similar trend was seen in JK Lakshmi Cement. Its president and director Arun Kumar Shukla said on an earnings call last month that the premium product mix has moved from 23% in Q1FY26 to 26% in Q2FY26, and that the company is going to take it further. It expects premium products, reduced distribution cost, tech-driven efficiency initiatives at its plants, and renewable power to drive margins for the cement maker.
Birla Corporation, part of the MP Birla Group, continues to attribute its profitability to a stronger push into trade sales, blended cement and premium brands. This helped cushion the sharp fall in non-trade realizations in the central region post-GST adjustments. “We have improved realizations by increasing the share of our value-added and premium products,” managing director & CEO Sandip Ghosh told investors last month.
In the cement industry, trade sales mean selling through dealers and retailers, while non-trade sales refer to selling directly to big buyers like government bodies or large construction companies for large-scale projects. Blended cement is cement made by mixing regular cement with other materials like fly ash or slag that makes it more durable and cheaper. Ghosh said the company considers its presence across both value and premium segments a strategic advantage, especially as rivals are only now beginning to expand their premium portfolios.
“The sector’s pivot toward premium products provides a hedge in a weak pricing environment,” Prashanth Kumar Kota and Ashutosh Murarka of Choice Institutional Equities wrote in a response to questions from Mint, adding that companies with deep trade distribution such as JK Cement, JK Lakshmi, Nuvoco and Birla Corp are intensifying premium launches to protect realizations.
Difficult to sustain
The Choice analysts warned, however, that premium mix alone cannot drive meaningful margin gains. “…significant margin improvement cannot be driven by premium mix alone. Sustained EBITDA accretion will require disciplined operating expenditure management and structural cost reduction to lower total cost per tonne,” they wrote.
They highlighted the competitive divergence is evident: “…incumbents like UltraTech and ACC have articulated cost-reduction roadmaps of ₹300-500 per tonne over the next 2-3 years, aided by scale, supply chain optimization, and fuel/clinker efficiencies. By comparison, mid-tier peers are targeting a more modest ₹50-200 per tonne reduction, suggesting a slower margin catch-up unless premiumization is accompanied by tighter cost controls and asset productivity gains,” Kota and Murarka noted.
Geojit Investments Ltd’s research analyst Vincent K A also agrees that the move to premiumization was prompted by realizations that had been under pressure due to weak demand.
“Large players, backed by strong brands and wide distribution networks, are well positioned to scale premium offerings. At the same time, the regional nature of the cement business, due to its bulk commodity nature and high logistics costs, allows local players to capitalize on brand loyalty and distribution strength to grow their premium portfolios,” said Geojit’s Vincent.
Satyadeep Jain, analyst at Ambit Capital, was of the view that the premiumization efforts would not be sustainable for long. “In a commodity sector like cement, premium sales and cost savings don’t necessarily translate into higher Ebitda per tonne, as competitive intensity forces the benefit to be passed on to customers,” he said. “Premiumization is unlikely to lead to any structural increase in industry margins, especially if everyone succeeds in raising premium share.”
But, Nuvoco Vistas’s Krishnaswamy said the company’s premiumization push is based on market demand trends. “As customers build their dream homes, there is a growing tendency to uptrade for better features, functionality, and performance,” he said on an email to Mint. “Consequently, Nuvoco is optimistic that premium cement will continue to outperform base cement in the near future.”
