When investors think about premiumisation, they usually look at auto, branded jewellery, alco-bev or FMCG stocks. Building materials, particularly ceramic tiles, rarely make the list.
As premium housing becomes a larger part of India’s real estate story, the shift is also reaching less obvious categories such as ceramic tiles. As consumers spend more on home finishes, the industry is seeing a gradual shift from basic ceramic tiles towards larger-format vitrified and Glazed Vitrified Tiles (GVT), which command higher realisations.
The shift is already visible in the stock performance of India’s three leading tile makers, Kajaria Ceramics, Somany Ceramics, and Orient Bell, since the start of FY27.
However, premiumisation is not translating into earnings in the same way for all three companies. Their starting points, margin profiles, and earnings trajectories are very different. That is also reflected in how the market is valuing their respective stories.
The GVT Flywheel: From Premiumisation to Margin Expansion
Indian homebuyers are increasingly moving away from basic ceramic tiles towards larger-format vitrified and Glazed Vitrified Tiles (GVT). These higher-value products typically command higher realisations and give manufacturers greater scope to move up the value chain. Plus, consumers in this segment are less sensitive to price hikes.
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This creates a potential flywheel: premiumisation, higher realisations, better margins, greater operating leverage, further investment in premium products and distribution.
Orient Bell provides one of the clearest examples. The share of GVT reached 47% of total sales in Q1FY27, compared to only 27% at the start of FY24. At the same time, premium products within its vitrified-tile portfolio increased to 60%. This indicates a gradual shift towards higher-value tiles.
Somany’s GVT share already stands at 40% of its mix, with management guiding for it to cross 50% within the next 12-18 months. Kajaria, meanwhile, has much higher exposure to vitrified products and is further pushing into premium categories through its “Kajaria 2.0” strategy.
The direction is similar across the industry, but the starting point is different. That makes the earnings impact of premiumisation very different for each company.
Three Companies, Three Different Turnaround Stories
#1. Orient Bell: The Market is Pricing in a Turnaround
Orient Bell offers one of the clearest examples of how premiumisation can translate into earnings growth. The company has been focusing on premiumisation and improving its product mix, while also strengthening its brand and distribution network. These initiatives have already started to create operational efficiencies and improve profitability.
Orient Bell: Quarterly Financial Performance
| Period | Q1FY26 | Q2FY26 | Q3FY26 | Q4FY26 | Q1FY27 |
| Revenue (₹ crore) | 140.2 | 164.0 | 166.4 | 212.6 | 201.0 |
| Operating Margin (%) | 3.5 | 5.6 | 6.1 | 7.1 | 8.2 |
| Net Profit (₹ crore) | -0.7 | 2.7 | 3.0 | 6.1 | 8.4 |
In Q1FY27, the company recorded nearly 43% YoY growth in revenue to ₹201 crore. Its operating margin more than doubled from 3.5% in Q1FY26 to 8.2% in Q1FY27. It has steadily improved its profitability as well.
The improvement was driven by a combination of volume growth and higher realisations. Tile sales volume increased 22.9% year-on-year in Q1 FY27 to 63 lakh square metres. At the same time, the company cumulatively raised prices by around 20% across its product range in March and April, helping offset higher input costs and improve realisations.
Management expects the improvements in margins to continue as well in FY27. The key question now is whether Orient Bell can sustain this improvement without relying disproportionately on price increases.
#2. Somany Ceramics: Premiumisation Backed by an Operational Turnaround
Somany’s recovery is being driven by three factors: premiumisation, improved operating efficiency and the turnaround of a loss-making plant. Unlike Orient Bell, where the margin recovery is still at an earlier stage, Somany has already moved its operating margin into double digits.
Somany Ceramics: Financial Performance
| Period | Q1FY26 | Q2FY26 | Q3FY26 | Q4FY26 | Q1FY27 |
| Revenue (₹ crore) | 604 | 685 | 682 | 818 | 750 |
| Operating Margin (%) | 8.0 | 8.0 | 9.0 | 11.0 | 12.0 |
| Net Profit (₹ crore) | 7 | 12 | 17 | 37 | 34 |
In Q1FY27, Somany reported 24% YoY growth in revenue to ₹750 crore, and operating margin expanded by four percentage points to 12%, from 8% in Q1FY26. The management has guided for at least a 1.5 percentage-point improvement in operating margin in FY27. Tile volumes are expected to grow in the high single digits, and if current prices hold, management indicated that revenue growth could be around 20-25%.
This makes Somany’s story less about a simple premiumisation-led re-rating and more about premiumisation combining with an operational recovery. The key monitorable will be whether the company can deliver the guided margin expansion while sustaining volume growth.
Kajaria Ceramics: Defending its Lead
Kajaria is in a different league from Orient Bell and Somany. With operating margins already around 20%, the company has far less room for a margin-led earnings turnaround. For Kajaria, premiumisation is instead about protecting realisations, strengthening its product mix and creating room for volume growth without sacrificing profitability.
Kajaria Ceramics: Financial Performance
| Period | Q1FY26 | Q2FY26 | Q3FY26 | Q4FY26 | Q1FY27 |
| Revenue (₹ crore) | 1,103 | 1,186 | 1,168 | 1,373 | 1,328 |
| Operating Margin (%) | 17.0 | 18.0 | 17.0 | 19.0 | 20.0 |
| Net Profit (₹ crore) | 110 | 134 | 86 | 157 | 171 |
The company’s Q1FY27 operating margin stood at 20%, up from 17% a year earlier. Management attributed the improvement to better realisations, cost optimisation and efficiencies across production, sales and supply chain. Volume growth was also strong at 11%, with demand momentum improving from January.
Kajaria also has a substantial exposure to higher-value vitrified products, and their plants are operating at higher utilisation levels. More importantly, management expects to maintain operating margins in the range of 18-19%.
To maintain its lead, Kajaria is ramping up its volume and is expanding its GVT capacity by 10 million square metres, with the expansion expected to be completed by March 2027. Its current manufacturing capacity includes 47.35 million square metres of GVT and 15.4 million square metres of polished vitrified tiles.
Kajaria has less scope for the kind of margin catch-up available to its smaller peers. Going forward, earnings growth will increasingly depend on volume expansion, capacity additions and the company’s ability to maintain margins.
What Should Investors Watch From Here?
For investors, three things matter from here. First is the base effect. Orient Bell and Somany are reporting sharp year-on-year profit growth partly because they are comparing against weak quarters. Orient Bell was loss-making in Q1 FY26, while Somany’s PAT was only ₹7 crore.
As these comparisons normalise, the growth rates will inevitably slow. Investors should therefore focus more on the absolute improvement in margins and earnings than on percentage growth.
Valuation Realities: Are Historical Multiples Misleading?
The second factor is valuation. Valuation offers a more nuanced picture. All three companies trade below their respective five-year median price-to-earnings (P/E) multiples, but that does not mean they are undervalued. Earnings themselves have changed, particularly for Orient Bell and Somany, which makes historical P/E comparisons less straightforward.
Valuation Trends
| Metrics | Trailing P/E | Industry PE | 5-yr Median PE |
| Orient Bell | 24.3 | 24.34 | 50.6 |
| Somany Ceramics | 19.5 | 31.2 | |
| Kajaria Ceramics | 34.2 | 47.3 |
Somany trades at 19.5 times trailing earnings, below its five-year median P/E of 31.2 times and the industry P/E of 24.3 times. Orient Bell, at 24.3 times, is also below its five-year median of 50.6 times and broadly in line with the industry.
However, Orient Bell’s valuation needs to be viewed alongside its earnings recovery. The sharp improvement in profitability has increased earnings and compressed the stock’s P/E multiple, even as the share price has rallied.
On the other hand, Kajaria commands a premium because of its stronger profitability and established market position. The question for investors is whether earnings growth can catch up with these valuations.
The third factor is volume growth. Price-led revenue growth can improve near-term financials, but sustained earnings growth ultimately requires volumes to keep expanding. This will be particularly important for Orient Bell and Somany as the benefits of recent price increases begin to normalise.
The Bigger Investment Takeaway
Premiumisation is creating an opportunity in tiles, but it is not a uniform sector-wide trade.
For Orient Bell, the story is about whether premiumisation can sustain a broader earnings turnaround. For Somany, it is about whether premiumisation and operational improvements can deliver the guided margin recovery. For Kajaria, the opportunity is more incremental: maintaining its premium product mix, expanding volumes and defending margins.
There is another reason the theme is interesting. Premiumisation does not always happen in obvious categories.
When a consumer moves from a basic ceramic tile to a GVT tile, they are also trading up. The purchase may be less glamorous than a car, smartphone or luxury watch, but the underlying shift in consumer behaviour is the same.
For investors, that makes the tile sector worth watching. The opportunity lies in identifying companies where premiumisation is still translating into improving margins and volumes, rather than simply paying a premium for a story the market has already priced in. Add these stocks to your watchlist and monitor how they execute their growth plans.
Disclaimer:
Note: We have relied on data from www.Screener.in throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information.
The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. If you wish to consider an investment, you are strongly advised to consult your advisor. This article is strictly for educative purposes only.
Deepan Datta has spent over a decade studying stocks and mutual funds. His passion is to uncover interesting stories in the financial markets and share them through his writings with investors at large. He is focused on delivering clear, easy to understand and research-backed insights. Deepan began his career as a Research Associate at S&P Global, where he developed a strong foundation in financial research and data analysis.
Disclosure: The writer and his dependents do not hold the stocks discussed in this article.
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