Cummins India, a leading manufacturer of diesel and natural gas engines for various markets, has seen its shares reach a record high on Thursday. The stock price rallied 10% on the Bombay Stock Exchange and reached a new high of Rs 1,616.50, surpassing its previous record of Rs 1,551.05. This surge in the stock price can be attributed to the company’s robust earnings report for the December quarter (Q3FY23).
During the quarter, Cummins India reported a profit after tax (PAT) of Rs 479 crore, which represents a 50% increase year-on-year (YoY) and a 42% increase quarter-on-quarter (QoQ). The company also recorded total sales of Rs 2,144 crore, which increased by 26% YoY and 12% QoQ. The earnings before interest, depreciation, tax, and amortization (EBITDA) margin improved to 18.9%, up from 15.63% in the same quarter last year.
The strong performance of Cummins India can be attributed to the continued demand momentum across all segments, including international markets. The management also cited moderation in commodity costs and inflation as factors that have helped sustain growth momentum.
The recent Indian government Union budget, which has a strong focus on the infrastructure sector, is expected to create strong demand for various segments in the domestic market.
The company remains cautiously optimistic about the short to medium-term demand outlook, given the geopolitical risks and inflation that may slow down developed markets.
However, Cummins India is well-positioned to benefit in the long run, given the healthy demand outlook, reviving margin profile, continued momentum in exports, and the implementation of new emission norms (CPCB IV+).
Overall, analysts believe that Cummins India is in a strong position to capitalize on the favorable market conditions and technology-driven new product launches. The company is expected to benefit from the upcoming transition from CPCB II to CPCB IV+ emission norms, which will take effect on July 1, 2023. With a focus on prudent cost management and a commitment to driving growth, Cummins India is well-positioned for continued success in the future.
