Cummins India surged 4.33% to Rs 614.20 after consolidated net profit rose 1.2% to Rs 199.88 crore on 2.9% decline in net sales to Rs 1431.54 crore in Q3 December 2019 over Q3 December 2018.
Profit before tax (PBT) declined 9.8% to Rs 258.05 crore in Q3 December 2019 from Rs 285.98 crore in Q3 December 2018. Total tax expenses for the December quarter stood at Rs 58.17 crore, down by 34.25% from Rs 88.48 crore in same period last year.
Domestic sales in the current quarter at Rs 1,058 crore increased 4% as compared to Rs 1,022 crore recorded during the same quarter last year. Exports for the current quarter at Rs 370 crore declined 16% as compared to Rs 441 crore recorded in the same quarter last year.
Ashwath Ram, managing director, Cummins India, said: "In the domestic business, our distribution business had their best quarter in history, registering strong growth at 18% due to execution on certain contracts, while the Industrial business grew 8% led by the compressor and rail segments. Sales in the Powergen and Construction segments, continue to be impacted because of the slowdown in the Indian economy. This scenario is likely continue for at least few more quarters and gradual revival may happen, as government measures to address these start to kick in and positively boost the economy.
Our confidence on the medium to long term outlook on domestic sales, especially from the infrastructure sector, is even higher as the allocations from the fiscal union budget work their way through this sector. Export markets have continued to display softness in recent quarters, arising from global economic challenges.
We executed on our cost optimization measures including zero based budgeting, to reduce our overall spend including on employment costs and have created an environment where people are conscious about every element of cost. These measures are being taken to help weather this slow demand cycle. We continue to be positioned to outperform in our industry and are investing judiciously in product enhancements, increasing our customer focus, while maintaining strong controls on our cost of operations. Improving productivity and quality, are strong focus areas as we continue delivering value to all our stakeholders."
Cummins has declared an interim dividend of Rs 7 per equity share. The record date for the same is 10 February 2020.
The stock rose 10.88% to hit the day's high at Rs 652.80, its highest intraday level since 18 September 2019.
At its post-earnings conference call, Cummins India reportedly said that royalty spends would go back to normal from Q4 FY20 and that the quarter might not see impact of one-time distribution order witnessed in Q3 FY20. The company maintained FY20 domestic revenue growth guidance at 3-5% and maintained FY20 export revenue guidance at 0-20% decline.
Cummins India a manufacturer of diesel and natural gas engines for power generation, industrial and automotive markets.
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