CUMMINSIND - Cummins India Ltd. Share Price

In the Q1 FY 2025-26 earnings conference call, Cummins India Limited's management provided an optimistic outlook for the financial year. Sales for the quarter ended June 30, 2025, reached INR 2,859 crores, an increase of 26% compared to INR 2,262 crores in the same quarter last year. Domestic sales surged to INR 2,336 crores (up 25%), while exports increased to INR 523 crores (up 34%). Profit before tax stood at INR 726 crores, representing a 32% increase year-on-year.

Management reiterated their expectation for double-digit growth in FY 2025-26, stating that while there are geopolitical uncertainties, India's economy remains stable. Shveta Arya, Managing Director, highlighted that the growth is broad-based across segments, particularly in Powergen, quick commerce, and mission-critical sectors like infrastructure. Specifically, domestic Powergen growth was robust at 31%, driven by core product demand without reliance on one-off projects.

Key forward-looking points include:

• Anticipated full-year double-digit growth based on stable GDP forecasts around 6.5%.
• The positive impact of government infrastructure initiatives and economic reforms.
• The introduction of Battery Energy Storage Solutions (BESS) is still in early stages, with a focus on the commercial and industrial sectors.
• Commitment to maintaining pricing stability in a competitive market, with no major cuts in the last two quarters.
• Continued expansion in the distribution segment with new product launches.

Overall, management's outlook remains cautiously optimistic, with strong growth opportunities across various segments bolstered by a favorable economic environment.

Questions and Answers from Q&A Section of Cummins India Limited Q1 FY 2025-26 Earnings Call

1. Question from Parikshit Kandpal:
"Are you going to set up a manufacturing footprint for the BESS solution in India? Have you started booking orders, and what risks might there be of cannibalizing existing business?"

Shveta Arya:
We have just launched the BESS solution and are building our order board. We're currently focused on customer engagement to share our value proposition. For now, we don't see a risk of cannibalization, as customers desire a mix of power options, including batteries alongside gensets, especially for solar storage.

2. Question from Nitin Arora:
"Is the Powergen growth you reported sustainable, and can you detail which segments are driving this growth?"

Shveta Arya:
Powergen's growth is broad-based, particularly fueled by quick commerce and mission-critical segments, including government infrastructure projects, hospitals, and manufacturing. We believe this robust growth is sustainable moving forward.

3. Question from Umesh Raut:
"What are the addressable opportunities for new products in the distribution segment, especially related to the railway segment?"

Shveta Arya:
Our distribution growth stems from improved penetration in Powergen and railways, driven by aftermarket solutions rather than solely new products. The new products contribute but are not the main growth driver.

4. Question from Mohit:
"Could you provide the sales breakup for HHP, MHP, and LHP in Powergen this quarter?"

Shveta Arya:
For this quarter, low horsepower was INR 84 crores, medium range was INR 229 crores, heavy-duty around INR 115 crores, and high horsepower was INR 628 crores, totaling INR 1,056 crores in Powergen.

5. Question from Jason Soans:
"What are the growth trends in the Industrial segments like construction and mining?"

Shveta Arya:
The Construction segment saw INR 147 crores; Rail was at INR 148 crores. We faced some project delays due to early monsoons, but generally, demand remains steady in these sectors.

6. Question from Ruchit Agrawal:
"Are the margins you've shown sustainable, and how is competitive intensity affecting your market share?"

Shveta Arya:
Our aim is to maintain our margins while facing increased competition from both domestic and foreign players. We continue cost optimization efforts to sustain our profitability despite the market's competitive landscape.

7. Question from Saif Sohrab Gujar:
"Are we seeing an increased supply to the U.K. due to the FTA, and has project revenue impacted Powergen growth?"

Shveta Arya:
We're exploring ways to enhance our presence in the U.K. market following the FTA. There is project revenue in the quarter, but it's not the main driver; our growth remains primarily focused on core segments.

8. Question from Chandrakant Kanase:
"What is the status of the flexible fuel engines and their launch prospects?"

Shveta Arya:
While we are developing flexible fuel engines globally, we currently don't see the market need for them. We're focusing on dual fuel kits, which allow customers to blend diesel and gas fuels.

9. Question from Aditya Mongia:
"Given the recent growth in exports, especially to the U.S., can we expect this trend to continue?"

Shveta Arya:
The U.S. market's potential will depend on current geopolitical factors. We've launched products that are gaining traction, indicating possibilities for growth in that market.

10. Question from Pulkit Patni:
"How are cost optimizations shaping your growth trajectory over the next few years?"

Shveta Arya:
Cost optimization will continue to be a priority as we upgrade and expand our capacities. While we look to leverage past optimization projects for better margin traction, continual investments will also fuel growth expansion.