Cummins India surges 10%, hits record high on robust Q3 results

Shares of Cummins India hit a record high of Rs 1,616.50, as they rallied 10 per cent on the BSE in Thursday’s intra-day trade after the company reported robust earnings for December quarter (Q3FY23). The company’s profit after tax (PAT) jumped 50 per cent year-on-year (YoY) and 42 per cent quarter-on-quarter (QoQ) to Rs 479 crore during the quarter.

The stock of the country's leading manufacturer of diesel and natural gas engines for power generation, industrial and automotive markets surpassed its previous high of Rs 1,551.05, touched on December 9, 2022.

At 09:53 AM; Cummins India quoted 8 per cent higher at Rs 1,594, as compared to 0.16 per cent decline in the S&P BSE Sensex.

Total sales for the quarter at Rs 2,144 crore increased by 26 per cent YoY and by 12 per cent QoQ. The earnings before interest, depreciation, tax and amortization (EBITDA) margin improved 327 bps to 18.9 per cent from 15.63 per cent in Q3FY22.

The company reported record quarterly revenue driven by strong domestic and export revenue coupled with prudent cost management resulting in record quarterly profit.

The management said the demand momentum company saw in earlier quarters continued across segments, including international markets during the quarter. With moderation in commodity costs, oil, and other industrial raw material coupled with easing inflation, the buoyant tax collections economy continues to sustain growth momentum, it added.

With geopolitical risk and inflation likely to slow down developed markets, the management remains cautiously optimistic about the short to medium-term demand outlook, the management said.

On outlook, Cummins India said the recent budget announced by the Government of India has a stronger outlay for the infrastructure sector, including railways, which is expected to create strong demand from various segments in the domestic market. India will reach a significant milestone in the Power Generation segment which will transition from CPCB II to CPCB IV+ emission norms effective July 1, 2023.

Central Pollution Control Board has allowed the sale of CPCB II generator sets till December 31, 2023, post which the Power Generation market will evolve based on the new emission norms.

Meanwhile, analysts believe Cummins India is well placed to benefit in the long run given healthy demand outlook, reviving margin profile, continued momentum in exports market, implementation of CPCB-IV and technology driven new product launches.