Cummins India is upbeat after expenses boosted Q4. But competition’s heating up.

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 WeE Announced Last Week. Investors Seem upbeat about the company’s recovery in expenses and Robust growth outlook across key segments, further aided by cost efficiency.

However, the 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 Sector.

Cummins’s fy25 revneue 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%).

Strong Growth is Envisaged From Key Sector Such as Residential Realty, Commercial Reality, Infra-Related Segments, Data Centers and Emerging Sector LIKE Quick Commerce for their warehoesing 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 efficions,” Nomura Global Markets Research SAID in a 30 MAY REPORTROT. The brokerage estimates cummins India to report a net profit Cagr of 15% over fY25-28.

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Cummins’s Pricing Challenges

Cummins’ Growth Prospects are Driven Mainly by its largest segment – Power generation, contributing almost 40% of FY25 SAles, and Compressing Gensets and Other Simler 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 solder 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’s Management Said the Company Has Been Able to Largely Hold on to its.

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-yar on a high base giving the pre-buying of CPCB II Products in Q4Fy24, Before the new norms kicked in. Q4Fy25 domestic revenue was up just 1%, but expens jumped 39%, LED by Latin American and European Markets.

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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 Causes by Dumping from Other Countries and MUTED Demand Due to General Economic Weakness.

Cummins’s Fourth-Quarter Gross Margin Exped 116 Basis Points Year-On-Yaar, Thanks to Lower Commodity Prisies 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 remain challenging, accounted 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 mass Levels for CPCB IV+ Normalize.

Increase in Commodity Prisis and Uneven Exports Recovery are other downside risks to watch out for.

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