JK Lakshmi Cement Bets on Strategic Expansion to Safeguard Market Position
In a bold move to fortify its standing in a competitive landscape, JK Lakshmi Cement Ltd has unveiled a comprehensive ₹3,000 crore expansion strategy. This initiative is squarely aimed at protecting and selectively growing its market share in core regions, even as the broader Indian cement industry witnesses aggressive capacity additions by larger players.
Focus on Core Markets and Defensive Growth
Arun Shukla, President and Director of JK Lakshmi Cement, emphasized that the expansion is not merely about chasing scale. "Our strategy is designed to defend relevance and strengthen our position in markets where we already command strong demand and high utilization," he stated. The company, part of the Singhania family and ranked among India's top 10 cement-makers, is prioritizing its existing geographies in North, West, and East India over a pan-India footprint.
This regional focus is critical, as Shukla noted that cement remains a regional business with market leadership varying sharply across different parts of the country. "Even today, the top five players in the east, north, or south are different. Regional strength still matters," he explained.
Financial Performance and Capacity Utilization
The expansion announcement follows the company's December quarter results, which showed a mixed financial picture. Revenue increased by 6% to ₹1,588 crore, but net profit declined by 23% to ₹57 crore. Despite this, JK Lakshmi Cement operates at a robust 73% capacity utilization for the first nine months of FY26, surpassing the industry average of 70%.
During peak demand months from November to June, utilization soars to 90-95%, leaving minimal headroom to serve customers. This capacity constraint risks market share losses unless addressed through expansion, Shukla highlighted. The new capex will add 4.6 million tonnes of cement capacity, raising total installed capacity from 18 mt to 22.6 mt by FY28, with plans to eventually reach 30 mt.
Industry Context and Competitive Landscape
The cement sector is experiencing a wave of capacity additions, with major players like UltraTech Cement and the Adani Group announcing ambitious targets. UltraTech aims to increase capacity to 240 mtpa by 2027-28, while Adani targets 155 mtpa. However, industry utilization, which rose from 63% in FY21 to 68% in FY25, is expected to stall below 70% through FY28 due to new projects, according to a PL Capital report.
This environment limits pricing power, making strategic expansions crucial for maintaining competitiveness. JK Lakshmi's expansion includes a new clinker unit and grinding facilities at Durg, Chhattisgarh, along with three greenfield split-grinding units in adjacent markets. The funding will come from a 70:30 mix of debt and internal accruals, with Shukla assuring that net debt-to-Ebitda remains below 1 and will stay within comfortable levels.
Premiumization Strategy and Future Outlook
Beyond capacity, JK Lakshmi is pursuing premiumization to enhance margins. Premium products currently account for 13-14% of turnover, with expectations to rise to around 16% in the medium term, driven by demand for higher-strength and lower-carbon options. The company recently launched its third premium cement, aligning with trends seen in peers like Nuvoco Vistas Corp. and Birla Corp.
However, analysts caution that in a commodity sector like cement, premium sales may not sustainably boost margins due to competitive pressures. Satyadeep Jain of Ambit Capital noted, "Premiumization is unlikely to lead to any structural increase in industry margins, especially if everyone succeeds in raising premium share."
Looking ahead, JK Lakshmi anticipates double-digit volume growth in FY26, outpacing the industry's estimated 7-8% growth, supported by ongoing infrastructure spending and steady housing demand. This expansion plan positions the company to navigate the challenges of a dynamic market while safeguarding its regional strongholds.
