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Informist, Thursday, May 29, 2025

By P. Madhu Kumar and Sunil Raghu 

MUMBAI/AHMEDABAD – Cummins India Ltd. expects to report double-digit revenue growth in 2025-26 (Apr-Mar), driven by strong demand across various sectors, the company's management said on Thursday in a post-earnings conference call with analysts and investors. The company's management expressed cautious optimism amid uncertainty surrounding US tariffs and trade policies, as well as lingering geopolitical issues. Despite these challenges, Cummins India said it was confident about its growth prospects, backed by a robust demand outlook for its power generator systems.

The company said demand for generator sets is coming from across sectors, including residential and commercial real estate, infrastructure, and data centres. The company is also seeing emerging segments like quick commerce contributing to its growth. Cummins India's exports have been showing signs of improvement, with the company working to position its products rightly in different markets. However, the management acknowledged the uncertainty in global markets due to tariffs and geopolitical situations.

In terms of financial performance, Cummins India is focused on sustaining its FY25 gross margin levels in FY26. The company has worked on reducing its direct material costs and has been able to hold on to its pricing. The management said that the improved gross margins were driven by a mix of factors, including cost-reduction efforts and product mix. The company's capital expenditure for FY26 is expected to be in the same range as FY25. Cummins India also mentioned that a strong demand outlook, along with its focus on cost management and strategic investments, positions the company for double-digit growth in FY26.

The generator set business, a key segment for Cummins India, has seen demand across various end-user markets. The company is witnessing growth in emerging segments like data centres, with no signs of a slowdown in demand. In the power generator system segment, the contribution from low horsepower generator sets to the FY25 revenue was INR 2.72 billion in FY25, INR 7.33 billion from medium-range sets, INR 3.76 billion from heavy-duty ones, and INR 24.63 billion from high horsepower sets.  

The company's management maintained a positive outlook on orders in the railways segment, driven by its ongoing efforts to develop new products and technologies for the rail market. The company said it has completed field trials for its hotel load converter and is expecting regular orders for this product. Additionally, Cummins India is working on the production of accident relief trains, which is expected to contribute to its growth in the railways segment.

In the mining segment, the company is shifting towards private miners, with Coal India tenders being delayed. The company is working with private miners, but the delay in Coal India tenders has impacted its expectations for the mining segment. Despite this, Cummins India remains  optimistic about its growth prospects in the mining segment.

The company's compressor business is expected to decline in the coming quarters, driven by its cyclical nature. Cummins India has analysed the trend over the past few years and anticipates a decline in the compressor segment.

In terms of exports, Cummins India has seen a strong performance from Latin America and Europe in FY25. However, the company is uncertain about the FY26 export trend due to global uncertainties, including trade deals and US tariffs. It also said the company has been working to position its products rightly in different markets and has seen growth in mainland Europe. 

The company's current capacity utilisation is around 65%, indicating scope for growth without significant capital expenditure. Cummins India has also focused on cost-reduction efforts and has largely not taken any product price hikes in FY25. The company's endeavour is to sustain or improve its margins through cost optimisation and value engineering. The management added that it has largely not taken any product price hikes in FY25.

The company said it is focusing on tailored products across segments to cater to the market needs and has assessed market behaviour which enabled it to implement market-based efforts. In order to enhance the quality of the products, the company is focusing on providing after-market assistance by continuously monitoring and analysing 'field data' across various segments. 

At 1404 IST, shares of Cummins India traded at INR 3,187 per share on the National Stock Exchange, up over 7%.  End

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

Edited by Tanima Banerjee

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