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Informist, Wednesday, Feb. 5, 2025

By Aman Aryan

MUMBAI – Cummins India Ltd. posted the slowest on-year growth in net profit in 10 quarters as the rise in the company's total expenses almost outpaced the increase in its revenue for the December quarter. It is also the 10th consecutive quarter that the company has booked an on-year growth in its earnings. 

The diesel and natural gas engine and generator sets manufacturer's net profit grew 13% on year to INR 5.14 billion, beating the analysts' estimate of INR 4.78 billion. This is the company's second-best quarterly net profit in at least 10 years, only next to the INR 5.62 billion profit in the March quarter of the previous financial year.

Cummins India's revenue for the December quarter rose 22% on year to its highest-ever INR 30.86 billion, beating the Street's estimate by a wide margin. The company's revenue was mainly driven by a robust growth in its engine business, which offset the impact of a slowdown in its lubes business during the December quarter. Sequentially, the engine maker posted a 14% increase in its net profit and a 24% increase in its revenue.  

Its total expenses grew 24% on year to INR 25.37 billion, outpacing the revenue growth for the quarter. The increase in overall cost was largely driven by a 31% rise in the cost of materials consumed and a 25% on-year rise in other expenses. Cummins India's cost of materials consumed was INR 16.37 billion and other expenses were INR 2.40 billion during the quarter. Prabhudas Lilladher Pvt. Ltd. had expected the company to report higher other expenses for the quarter, which would likely have weighed on the operating profit margin for the company.

A back-of-the-envelope calculation shows the company's operating profit for the quarter was INR 6 billion, up 11.5% from the year-ago quarter, at an operating profit margin of over 19%, down 179 basis points on year. 

Both domestic sales and exports drove the company's revenue for the latest quarter. Cummins India's domestic sales rose 18% on year to INR 25.77 billion and revenue from exports rose 43% on year to INR 4.64 billion during the December quarter. Both Motilal Oswal Financial Services and Nomura Equity Research had expected an over 40% increase in the company's exports for the quarter.  

The company's engine business generated revenues of INR 30.52 billion, up 22% on year. However, its lubes business reported a 5% on-year fall in revenue for the December quarter to INR 5.32 billion.  

The company will pay an interim dividend of INR 18 per share, which is nine times the face value of each share. It has fixed Feb. 14 as the record date and Mar. 3 as the final day for dividend payment. For the nine months ended December, the company has reported a 26% on-year increase in net profit of INR 13.84 billion and a 19% on-year rise in revenues of INR 78.83 billion.

Its holding company, Cummins Inc., expects the sales of heavy and medium trucks to be around 390,000-430,000 units in 2025 in India, representing a fall of 5% to a growth of 5% in its market size compared to 2024. 

The company reported its earnings post market hours. On Wednesday, shares of the company closed at INR 2,921.15 on the National Stock Exchange, up 2.4%.  End

Edited by Deepshikha Bhardwaj

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