&w=3840&q=100)
Cummins India's growth engines should continue to deliver in FY26
Cummins India 's results for fourth quarter of the financial year 2024-25 (Q4FY25) showed low revenue growth, but strong margins compensated. The company reported 6 per cent year-on-year (Y-o-Y) revenue growth, while Ebitda and PAT declined by 5 per cent and 7 per cent Y-o-Y, prior to adjustment for one-offs, due to a high base effect.
Cummins, the country's leading manufacturer of diesel and natural gas engines, will benefit from better volumes for CPCB 4+ products in FY26 as powergen demand recovers further, there is improved growth in railways, and increased penetration of products and improving growth outlook in export markets.
Revenue increased 6 per cent Y-o-Y to ₹2,460 crore, but domestic revenue at ₹1,940 crore grew 1 per cent Y-o-Y, while exports at ₹480 crore grew strongly by 39 per cent Y-o-Y. The gross margin at 37.2 per cent saw a 120 basis point (bp) Y-o-Y and 240 bp quarter-on-quarter (Q-o-Q) expansion, while Ebitda margin for Q4FY25 stood at an excellent 21.2 per cent. The absolute Ebitda dipped 5 per cent Y-o-Y to ₹520 crore, and PAT declined 7 per cent Y-o-Y to ₹520 crore.
For FY25, the revenue grew 15 per cent Y-o-Y to ₹10,340 crore and Ebitda grew 17 per cent Y-o-Y to ₹2,070 crore, and PAT grew 15 per cent Y-o-Y to ₹1,910 crore, while Ebitda margin expanded 30bp Y-o-Y to 20 per cent.
The company's operating cash flow (OCF) and free cash flow (FCF) increased 32 per cent and 46 per cent Y-o-Y respectively to ₹1,690 crore and ₹1,460 crore due to lower net working capital. As of 31st Mar'25, Cummins India was debt-free. The company has three key businesses namely, engines, power systems and distribution.
Powergen segment revenue declined by 7 per cent Y-o-Y in Q4FY25, affected by a high base of last year. The Q4FY25 volumes were around 80-85 per cent of Q4FY24 level. For FY25, powergen revenue grew by 14 per cent Y-o-Y, implying some of the volume decline due to CPCB 4+ transition was offset by pricing improvements.
Given competitive intensity stabilising and demand recovering from key areas like residential, commercial, and infrastructure, volume growth may recover in FY26. Beyond CPCB 4+, KKC sees strong demand from data centres with a likely compounded annual growth rate (CAGR) of 16.5 per cent in powergen revenues during FY25-27. Management confirmed that demand remains robust across residential, commercial, infrastructure, and quick-commerce warehouses and data centres.
Industrial segment delivered a healthy Q4FY25, posting ₹3,800 crore in revenue (up 9 per cent Y-o-Y), and ₹1,700 crore in FY25 (up 28 per cent YoY), reflecting broad-based demand. Momentum is building around specialised applications such as hotel load converters and accident relief trains. The compressor business is steady but anticipated to enter a cyclical downturn. Given a wide product portfolio, high teens growth can be expected across the industrial portfolio.
The distribution segment revenue grew by 5 per cent Y-o-Y in Q4FY25 and by 14 per cent Y-o-Y in FY25. The segment benefited from long-term contracts, value-added services, and aftermarket support. Export revenue surged 39 per cent Y-o-Y in Q4FY25. Latin America and Europe continued to perform exceptionally. Management is cautiously optimistic about exports for FY26.
Management attributed modest growth in distribution to order timing and project execution schedules. Key drivers included extended warranties, rebuild engine orders (especially in industrials), and retrofit solutions like dual-fuel kits. The company remains confident about future growth in this segment, supported by higher penetration and value-added offerings.
Overall, Cummins India has guided for double-digit revenue growth in FY26. This will be driven largely by domestic demand across powergen, industrial, and distribution segments. Cummins is a market leader in diesel gensets.
Domestic demand is expected to stay robust while exports seem to be seeing gradual recovery given the current geopolitical scenario, and uncertainty. The company has been able to hold onto pricing post CPCB 4+ and increased competitive intensity. Most analysts seem positive on the stock, which has risen nearly 10 per cent over two sessions post Q4, and the guidance is seen as conservative and credible.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
2 days ago
- Time of India
I-Sec maintains Buy on Cummins India, target price Rs 3,100
ICICI Securities has a Buy call for Cummins India. The target price is revised to Rs 3,100. Cummins India's market cap is Rs 92667.96 crore. The company's total income for the quarter ended 31-03-2025 was Rs 2596.87 crore. Net profit after tax was Rs 439.13 crore. ICICI Securities values the company on its FY27E standalone earnings. FIIs owned 17. Tired of too many ads? Remove Ads (Disclaimer: Views and recommendations given in this section are the analysts' own and do not represent those of Please consult your financial adviser before taking any position in the stock/s mentioned.)
Hindustan Times
2 days ago
- Hindustan Times
India's Path Through COP30 and Carbon Innovation
As the world prepares for COP30 in Belém, Brazil, in 2025, the urgency of climate action has never been greater. The IPCC's Sixth Assessment Synthesis Report (2023) confirmed what climate scientists have long warned - global warming is accelerating, and the world must act swiftly and cohesively to stay within the 1.5°C threshold. Against this backdrop, COP30 represents not only a critical inflection point for global negotiations but also a pivotal opportunity for India to fast-track its climate ambition through robust carbon markets and the adoption of cutting-edge technologies such as digitally verified carbon offsets. This World Environment Day, as we reflect on environmental stewardship, it is essential to examine how India can shape and benefit from these evolving global mechanisms. India has historically walked a tightrope between development imperatives and environmental responsibility. However, the past few years have seen a definitive shift. India remains one of the few major economies whose emissions trajectory is broadly aligned with its fair share under the Paris Agreement, despite its lower historical emissions and ongoing development needs. According to Climate Action Tracker (2024), India's climate policies are more ambitious relative to its capabilities than many high-income nations, and its renewable energy targets are among the most aggressive globally. India's target of achieving net-zero emissions by 2070, supported by intermediary milestones such as 500 GW renewable energy capacity by 2030, reflects both ambition and pragmatism. One of the most significant instruments in this strategy is the development of a national carbon market. In July 2023, India formally launched the Carbon Credit Trading Scheme (CCTS), governed by the Bureau of Energy Efficiency and the Central Electricity Regulatory Commission. This compliance carbon market builds upon the successes of the Perform, Achieve and Trade (PAT) scheme, but unlike PAT, the CCTS opens the door for trading emission reduction certificates beyond the power and industrial sectors. The policy framework under the Energy Conservation (Amendment) Act, 2022, integrates voluntary and compliance markets under a unified structure. Experts estimate that India's carbon market could unlock a $200 billion opportunity by 2030, combining domestic growth with environmental integrity. Sectors like steel, cement, transport, and even agriculture are expected to come under its ambit, allowing Indian industries to earn credits by exceeding efficiency norms and trade them within a national or international carbon market. While carbon pricing is still nascent in India, the International Carbon Action Partnership (ICAP) has acknowledged the country's proactive steps as exemplary among developing nations. This approach, experts argue, not only supports emissions reduction but offers Indian companies a competitive edge in a carbon-constrained global economy, particularly once the EU's Carbon Border Adjustment Mechanism (CBAM) fully comes into force by 2026. The credibility of carbon markets hinges not merely on the volume of credits traded, but on their integrity, traceability, and impact. Traditional Monitoring, Reporting and Verification (MRV) mechanisms are often paper-heavy, delayed, and susceptible to manipulation. In this context, Digitally Verified Carbon Offsets (DVCOs) are emerging as a transformative solution. DVCOs use blockchain, satellite imagery, remote sensing, and machine learning to validate emissions reductions in real time. This dramatically reduces verification costs and enhances transparency, making it easier for buyers to trust the offsets they purchase. The World Bank and other organizations highlight that digital MRV systems can significantly streamline the measurement, reporting, and verification processes, leading to increased efficiency and reduced transaction costs. For instance, the World Bank notes that digital technologies can help reduce the cost and time to emission reduction credit issuance, enabling more efficient verification and the move toward real-time generation of carbon credits. India is already demonstrating leadership in this domain. In January 2025, Google announced a landmark partnership with Indian start-up Varaha, which uses mobile-enabled MRV tools and remote sensing to convert agricultural waste into biochar - a stable form of carbon that also improves soil fertility. This project is anticipated to sequester up to 10,000 tonnes of CO₂ equivalent by 2030 while supporting thousands of smallholder farmers. This model exemplifies the co-benefits of digitally verified offsets: environmental impact, economic upliftment, and technological empowerment. Such solutions are scalable across sectors - be it afforestation, renewable energy, or waste management, and can serve as India's flagship offerings in global voluntary carbon markets. Platforms such as Earthlink by Earthood are, therefore, pioneering efforts being made in India to enable real-time and digital certification of emission reductions, ensuring that Indian offsets meet the high-integrity standards required under Article 6 of the Paris Agreement. Earthood's innovative approaches provide the capability to leapfrog legacy verification bottlenecks. The climate agenda at COP30 will largely hinge on the operationalisation of Article 6 of the Paris Agreement, particularly Article 6.2 and 6.4, which govern the framework for international carbon trading and the Sustainable Development Mechanism respectively. At COP29 in Dubai, countries achieved consensus on establishing a registry and tracking system for international carbon transactions, thus setting the stage for concrete market activities under Article 6 by the time COP30 convenes in Brazil. India, as a major emitter and a developing economy, is expected to play a pivotal role in shaping these dialogues. Aligning India's domestic carbon market with Article 6 mechanisms could unlock access to global finance, particularly through Internationally Transferred Mitigation Outcomes (ITMOs). These allow countries or companies to buy high-quality credits from India to offset their own emissions, thereby channeling funding into Indian climate projects, especially those involving rural communities, biodiversity preservation, or green infrastructure. Moreover, India's presidency of the G20 in 2023 and continued participation in coalitions such as the International Solar Alliance and the Leadership Group for Industry Transition (LeadIT) underscore its diplomatic clout in climate matters. India must also seize the opportunity to press for climate finance reform at COP30. While developed nations agreed to mobilise $100 billion annually by 2020, a promise largely unmet - projections suggest that developing countries will need at least $1.3 trillion annually by 2035 to meet their climate goals. India can lead the call for improved financial flows, concessional loans, and blended finance instruments, ensuring that carbon markets do not replicate historic inequities. The journey from intention to impact must be paved with transparency, innovation, and collaboration. Digitally verified carbon markets offer precisely this promise--of making emissions reductions verifiable, financeable and scalable. For India, they offer not only a pathway to meet its net-zero commitment, but also a chance to become a global provider of credible, high-integrity climate solutions. In the decade that defines the future of the planet, India must not just participate - it must lead! This article is authored by Tuhin A. Sinha, national spokesperson, BJP and Kaviraj Singh, executive director and CEO, Earthood.
Mint
4 days ago
- Mint
Cummins India is upbeat after exports boosted Q4. But competition's heating up.
Cummins India Ltd's standalone Ebitda of ₹520 crore for the March quarter (Q4FY25) represents a 7% year-on-year rise, excluding a one-off cost-saving of ₹60 crore. This growth is subdued when compared with the 27% increase in Ebitda for the nine months ended December (9MFY25). In fact, Cummins's reported Q4FY25 Ebitda is down 4.5% without adjusting for the one-off savings. Yet, the shares are up about 13% since the results were announced last week. Investors seem upbeat about the company's recovery in exports and robust growth outlook across key segments, further aided by cost efficiency. However, competition can dent a part of the margins for Cummins, a manufacturer of diesel and natural gas engines for the power generation, industrial, and automotive sectors. Cummins's FY25 revenue surpassed the milestone of ₹10,000 crore, growing 15% year-on-year. Lower raw material and staff costs meant 17% Ebitda growth to ₹2,100 crore. The management expects to maintain double-digit revenue growth rate in FY26, aided by positive domestic demand outlook and sustained margins (FY25 gross margin: 36%) thanks to cost savings. Strong growth is envisaged from key sectors such as residential realty, commercial reality, infra-related segments, data centers and emerging sectors like quick commerce for their warehousing needs. Further, the industrial segment is expected to benefit from railways ordering traction and momentum in construction. 'We raise our FY26/FY27F Ebitda estimates by 2% as we factor in management's gross margin guidance and focus on cost efficiencies," Nomura Global Markets Research said in a 30 May report. The brokerage estimates Cummins India to report a net profit CAGR of 15% over FY25-28. Also read | Apollo Hospitals' healthy capacity addition to drive future growth Cummins's pricing challenges Cummins' growth prospects are driven mainly by its largest segment—power generation, contributing almost 40% of FY25 sales, and comprising gensets and other similar products. The Central Pollution Control Board of India (CPCB) implemented a change in emission rules from July 2024 in the gensets market called CPCB IV+. Current sales are still at 80-85% of volumes sold under the older rules. This is expected to normalize from Q2/Q3FY26. While several companies have launched CPCB IV+ compliant products leading to stiffer competition, Cummins's management said the company has been able to largely hold on to its pricing. Cummins's FY25 power generation revenue grew by 14% even as it dropped 7% in Q4FY25 on a high base. Industrial segment revenue, contributing 16% of total, was up 29% in FY25, driven by sustained momentum in construction and railways orders. Overall, Cummins's Q4FY25 revenue stood at ₹2,450 crore, up a modest 6% year-on-year on a high base given the pre-buying of CPCB II products in Q4FY24, before the new norms kicked in. Q4FY25 domestic revenue was up just 1%, but exports jumped 39%, led by Latin American and European markets. Also read | Amara Raja's March quarter margin is an irritant. More trouble ahead? Exports, accounting for 17% of FY25 revenue, grew 41% in H2FY25, versus an 18% drop in H1FY25, signalling the worst is over. Exports are facing pressure due to price disruptions caused by dumping from other countries and muted demand due to general economic weakness. Cummins's fourth-quarter gross margin expanded 116 basis points year-on-year, thanks to lower commodity prices and a change in product mix. As things stand, the Cummins stock trades at about 44 times FY26 estimated earnings, showed Bloomberg data. To be sure, post the new CPCB upgrade, the pricing environment remains challenging, accompanied by stiffer competition. In view of this, some such as Motilal Oswal Financial Services reckon their estimates factor in a gross margin of 35% in FY26/27 versus 36% in FY25 as they expect some gross margin contraction after price levels for CPCB IV+ normalize. Increase in commodity prices and uneven exports recovery are other downside risks to watch out for. Also read | Prestige Estates makes room for a better FY26 as approval delays ease
