Cummins India’s growth hinges on pricing trend, competitive intensity
Cummins India staged a recovery on Monday with over 6% gain after shedding nearly 7% since declaring the September quarter result on November 7. The company reported a strong double digit growth year-on-year in revenue and profit for the second quarter amid expansion in operating margin before depreciation and amortisation (EBITDA margin). However, uncertainty over the extent of demand, pricing of the diesel power generators under 800 Kilowatt-hour (kWh) capacity, which was buoyant in the first two quarters of the current fiscal year, and elevated valuation are some of the concerns for the stock.
The Central Pollution Control Board made CPCB IV plus compliance mandatory for generators under 800 KVA range since July 01. These standards, in a bid to improve air quality, prescribe the permissible levels of pollutants emitted by diesel generators. This regulatory push was a key driver in sales of gensets under 800 kWh during the first half of FY25 for Cummins India. In addition, the company also reported traction from data centre sector for its generators, which are in the above 800 kWh range and follow CPCB II norms.
On a standalone basis, revenue grew by 30.8% to Rs 2,448.4 crore while net profit rose by 37.2% to Rs 450.6 crore. The domestic business rose by a strong 47% to Rs 2,008 crore whereas exports dropped by 13% year-on-year to Rs 440 crore. Exports have shown sequential improvement over the past few quarters. The company reported improvement in orders from Latin America and Europe while the Middle East, Asia
