Cement cos aim for premium products to lift their margins

Cement makers such as Nuvoco Vistas, Birla Corp. and JK Lakshmi Cement are leaning on premium products to boost margins without raising prices—an approach analysts say may work for now but will likely fade as competition intensifies in the premium segment.

- Dipali Banka

Cement companies have refrained from raising prices to pass on the benefit of lower GST to consumers.

(BLOOMBERG)

After the goods and services tax (GST) rate on cement was rationalized, 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 profits amid heightened competition.

India’s cement industry is highly concentrated, with the top four firms controlling 60% of capacity and top nine holding 81%, according to Systematix Institutional Equities.

Nuvoco Vistas, Birla Corp. and JK Lakshmi Cement—together hold 9% of the 688-million-tonne industry capacity—are among the top-9 group. “We have very ambitious plans to increase premiumization, and it should improve realizations going forward,” Nuvoco Vistas's managing director Jayakumar Krishnaswamy told analysts during a post-earnings call in November.