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Informist, Friday, Nov. 8, 2024

 

--Cummins India: Expect double-digit revenue growth in FY25 

--CONTEXT: Cummins India mgmt's comments in post-earnings analyst concall 

--Cummins India: Expect good growth from data centres in coming months 

--Cummins India: AI to lead growth in product sales for data centres 

 

By Akshay V. Johnson and Avishek Rakshit

 

MUMBAI – Cummins India Ltd. expects double-digit revenue growth in 2024-25 (Apr-Mar) after the company's earnings for the September quarter beat estimates. The company's exports saw a fourth consecutive quarter of recovery driven by sizeable orders coming from Latin America and Europe. The West Asia, Asia-Pacific, and the African region remained muted, so the signals are mixed, the management said in a call with analysts after declaring its results for the September quarter. 

 

Of the total domestic sales of INR 20.08 billion for the September quarter, the power generation segment contributed INR 8.96 billion, up 84% on year. Domestic distribution business sales were INR 6.58 billion, up 20% on year. Domestic industrial segment sales were INR 4.06 billion, up 35% on year. Cummins India's net profit for the quarter was INR 4.51 billion, higher than analysts' estimate of INR 4.15 billion. The revenue rose 30.8% on year to INR 24.92 billion in the September quarter. Analysts had expected a revenue of INR 22.58 billion.

 

Data centre is a focus segment for the company and is a growing segment, the management said. The company said it expects to see good growth from data centres in the coming months. However, the management did not comment on what their market share is in the data space segment. The company expects the data centre nodes in India will move up the range, but for now data centres are a very space-constrained space in the country. Higher nodes mean higher power generation. Since data centres are smaller in India, their power requirements are less. The company expects artificial intelligence to lead the growth in product sales for data centres.

 

The company launched the Central Pollution Control Board IV+ emission standard compliant range of generator sets engines in July. When asked about any corrections in its pricing, the company said other players are launching similar products now and any corrections can be evaluated after the coming two quarters. Of the total domestic power generation segment, the product mix continues to be mostly Central Pollution Control Board IV+ generator sets.

 

Currently, the company has a manned capacity in excess of 90% and the installed capacity is around 60%, the management said. Hence, the company had ample capacity available to meet any surge in orders received. Manned capacity is a method of measuring manufacturing capacity by counting the number of products produced during a specific period of time, while installed capacity is the capacity of a power generation unit to produce a certain amount of power over a given time. The company has seen strong demand from the construction segment and strong demand is expected in the coming quarter as well, the management said.

 

In the power generator segment, the high-horsepower category posted a revenue of INR 4.52 billion for the September quarter; the mid-horsepower category posted a revenue of INR 1.78 billion, and low-horsepower posted a revenue of INR 1.99 billion. For the industrial business, the construction segment posted a revenue of INR 1.46 billion, the railway segment posted a revenue of INR 1.05 billion, the mining segment posted a revenue of INR 320 million, and the compressor segment posted a revenue of INR 580 million.

 

The company believes the broader economic outlook is stable and India's GDP is expected to grow by 7% and the export market is showing signs of recovery. At 1344 IST, shares of the company traded at INR 3,671.60 on the National Stock Exchange, up 3.3%.  End

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Vidhi Verma

 

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