In a strategic shift to safeguard profitability without raising consumer prices, leading Indian cement manufacturers are aggressively pushing their premium product portfolios. This move comes after the rationalization of the Goods and Services Tax (GST) rate on cement in September 2025, which saw companies refrain from passing on tax benefits through price hikes. However, industry analysts caution that this focus on premiumization may be a short-term fix, with heightened competition likely to trigger a price war in this lucrative segment.
The Premiumization Push: A Margin Protection Strategy
Major players like Nuvoco Vistas Corp., Birla Corporation, and JK Lakshmi Cement are at the forefront of this trend. Together, these companies represent approximately 9% of India's total cement production capacity of 688 million tonnes. They belong to the top-nine cohort that collectively controls 81% of the industry's annual capacity, with the top four firms alone commanding a dominant 60% share, according to data from brokerage Systematix Institutional Equities.
Nuvoco Vistas reported a record premium mix constituting 44% of its sales volumes in the second quarter of the 2025-26 financial year (Q2 FY26), up from 41% in the previous quarter. The company's managing director, Jayakumar Krishnaswamy, outlined ambitious plans to increase this share by another 1.5 to 2 percentage points in the coming quarters. He stated that the company is "morally obligated" not to adjust prices upward in the short term following the GST reduction. Instead, Nuvoco aims to improve net realizations by ₹25-50 per tonne through internal initiatives, including a stronger push for premium brands and shifting sales focus to high-margin states like Rajasthan, Chhattisgarh, and Haryana.
A similar strategy is evident at JK Lakshmi Cement, where the premium product mix grew from 23% in Q1 FY26 to 26% in Q2 FY26. The company's president and director, Arun Kumar Shukla, confirmed intentions to drive this figure higher. Birla Corporation is also attributing its sustained profitability to a reinforced focus on trade sales, blended cement, and premium brands, which helped offset a sharp decline in non-trade realizations in the central region post-GST.
Analysts Sound the Alarm on Sustainability
While the pivot to premium products offers a temporary hedge in a weak pricing environment, financial experts are skeptical about its long-term viability. Analysts Prashanth Kumar Kota and Ashutosh Murarka from Choice Institutional Equities noted that while companies with deep trade networks are intensifying premium launches, significant margin improvement cannot be driven by product mix alone. They emphasized that sustained earnings growth will require disciplined cost management and structural reductions in the cost per tonne.
The analysts highlighted a growing competitive divergence. Incumbents like UltraTech and ACC have outlined ambitious cost-reduction roadmaps of ₹300-500 per tonne over the next 2-3 years, leveraging scale and operational efficiencies. In contrast, mid-tier players are targeting more modest reductions of ₹50-200 per tonne, suggesting a slower margin catch-up unless premiumization is paired with stringent cost controls.
Satyadeep Jain, an analyst at Ambit Capital, offered a stark warning. He argued that in a commodity sector like cement, benefits from premium sales and cost savings are often passed on to customers due to fierce competition, failing to translate into higher EBITDA per tonne. "Premiumization is unlikely to lead to any structural increase in industry margins, especially if everyone succeeds in raising premium share," Jain stated.
The Road Ahead: Demand Recovery and Market Realities
The current strategy is partly a response to realization pressures from weak demand. According to a note from B&K Securities dated 5 November, most dealers indicated that price hikes are unlikely in the near term, with potential revisions expected only from January 2026, contingent on demand recovery. Demand was anticipated to pick up from mid-November.
Despite the caution, cement executives remain optimistic about the market's appetite for premium products. Nuvoco's Krishnaswamy pointed to a growing consumer trend of "uptrading" for better features and performance when building homes, expressing confidence that premium cement will continue to outperform base cement in the near future. Similarly, Vincent K A, a research analyst at Geojit Investments Ltd., noted that the regional nature of the cement business allows local players with strong brand loyalty and distribution to effectively grow their premium portfolios.
As the industry navigates the post-GST landscape, the race for premium market share is intensifying. The coming quarters will reveal whether this focus on high-value products can durably protect margins or if, as analysts predict, it will inevitably lead to a new front in India's cement price wars.
