Cummins India surges 25% in one month; nears record high on healthy outlook

Shares of Cummins India hit an over six-year high of Rs 1,209.15, up 4 per cent on the BSE in Thursday’s intra-day trade on a healthy business outlook. In the past one month, the stock has rallied 25 per cent compared to a 6 per cent rise in the S&P BSE Sensex. It was trading close to its record high of Rs 1,247 touched on August 7, 2015.

Cummins India is engaged in the business of manufacturing, trading and selling of engines and allied activities. For the year ended March 31, 2022 (FY22), the company had reported record sales of Rs 6,026 crore, higher by 42 per cent compared to Rs 4,256 crore posted last year. Profit before tax and exceptional items grew 27 per cent year-on-year at Rs 1,027 crore.

Cummins India expects the current trend of sustained growth across multiple industries and segments, demand outlook from various end markets to be positive. The company anticipates that India's growth momentum will sustain with a strong push from the government through policy interventions and infrastructure spending coupled with an improvement in supply chain situation.

The momentum of economic growth is expected to continue led by gains from the supply side reforms, credit support to MSME sector and government expenditure on infrastructure programmes in the coming years. Private capex cycle is expected to pick-up led by credit growth and incentivising capital formation through production linked incentive (PLI) scheme.

While the average power supply deficit at a national level continues to remain less than 1 per cent, the company expects the power generation business to follow a growth trajectory led by opportunities arising from segments like infrastructure and manufacturing due to expected higher capital expenditure by the government, Cummins India said in its FY22 annual report.

With an objective of moving towards a green economy with net zero emissions, Indian Railways is also evaluating hydrogen fuel cell solutions for Diesel Electric Multiple Unit (DEMU) and other shortdistance mainline applications. Cummins is actively exploring ways to partner with Indian Railways on this initiative, the company said.

The market for stone crushers is expected to grow rapidly as the government plans to construct 25,000 kms of national highway under the PM Gati Shakti initiative. Cummins India said it participates in the market to power electric stone crushers.

Power back-up solutions operating on alternate energy sources are expected to enter the power generation landscape in the coming years. The company sees these technologies as opportunities to serve customers as they become more viable. With greater focus on more stringent environmental norms in the future, the company said it is positioned favourably as one of the pioneers in producing engines with cleaner technology.