Cummins India Ltd

Cummins India Ltd is a part of the Cummins Inc. Group USA. It designs, manufactures, distributes and services diesel and alternative fuel engines from 2.8 to 100 liters, diesel and alternative-fueled power generator sets of up to 3000 kW (3750 kVA), as well as related components and technology.

Sector-wise breakup

• Engines Business Division (~69% of revenues)
• Lubes Business Division (~31% of revenues)

Shareholding Pattern

–PUBLIC GROUP

-PROMOTER GROUP

Financial Summary

Synopsis of Financials

• Q1 FY24-25 sales at ₹2,262 crores, a 4% increase from ₹2,175 crores in the same quarter last year.
• Domestic sales rose by 12% to ₹1,873 crores; however, export sales fell by 22% to ₹389 crores.
• Profit before tax increased by 33% to ₹551 crores compared to the same quarter last year.
• Compared to the previous quarter, sales were almost flat, with domestic sales declining by 3% and exports increasing by 13%.
• Profit before tax decreased by 21% from the previous quarter.

Final Outlook

We expect Cummins’ outlook to remain intact given

1) strong domestic demand in power gen across sectors with CPCB-IV product witnessing traction.

2) improving margin profile and

3) ample room for growth in distribution business. The stock is trading at a good P/E

4) Powergen business saw volume growth of 20%+, led by demand from data centers, commercial & residential realty

5) CPCB IV+ offtake has been slow as CPCB II is allowed to be sold until June24, but demand should pick up Q1FY25 onwards

6) Data centers will be a key growth driver, presenting a Rs5bn+ annual opportunity for Cummins. CPCB IV+ is not applicable to gensets used here.

I will be giving Buy/Hold Recommendation for this stock.