Cummins India shares fall over 4% as Q1 net profit dips 8% to Rs 543 crore. Buy, sell or hold?

Shares of Cummins India declined 4.3% to their day's low of Rs 5,171 on the BSE on Thursday after the company reported an 8% year-on-year decline in net profit for the June quarter, even as revenue posted strong double-digit growth.

Profit after tax for the quarter stood at Rs 543 crore, down 8% from a year ago. Total sales rose 18% year-on-year and 14% sequentially to Rs 3,375 crore. Domestic sales came in at Rs 2,854 crore, up 22% compared with the year-ago quarter and 14% higher than the previous quarter. Export sales stood at Rs 521 crore, remaining flat on a year-on-year basis while rising 16% sequentially.

The company also announced that Managing Director Shveta Arya will step down at the end of August to pursue opportunities outside the organisation.


Profit before tax, before exceptional items, was Rs 721 crore, with a margin of 21.4%. The margin was marginally lower by 0.7% compared with the same quarter last year.

Cummins India outlook

Looking ahead, the company expects business momentum to remain steady across its key markets, although inflationary pressures and supply chain constraints are likely to continue influencing the operating environment. It said the focus will remain on disciplined execution, cost management and improving operational efficiencies.

Cummins India added that its healthy balance sheet and strong liquidity position will support a measured approach towards execution, capital deployment and cost control. The company said it remains committed to creating long-term value by leveraging its technology, experienced workforce, established brand, market-relevant product portfolio, manufacturing capabilities, and extensive distribution and service network.

Nomura on Cummins India share

Nomura retains Neutral rating and target of Rs 6,000 on Cummins India. It said that the demand environment is likely to remain healthy, led by key end-user markets such as data centers, real estate, manufacturing, and quick commerce. However, it witnessed higher-than-expected margin contraction in 1QFY27 due to commodity cost headwinds and margin recovery will hinge on the company's pricing action and the inflationary environment, which will be key monitorables.

HSBC on Cummins India share

Earlier this week, HSBC has maintained a Buy rating on Cummins India with a target price of Rs 6,500, implying a potential upside of 19.5%.

The brokerage expects the company's power generation business, which contributes around 40% of revenue, to remain a key growth driver. It expects demand in the segment to improve as volumes normalise to pre-emission standard levels and pricing stabilises. Growth is also likely to be supported by robust demand from commercial and residential real estate projects nearing completion, boosting the need for backup power solutions.

HSBC also sees significant potential from the data centre segment, which contributes about 25% of power generation revenue. It expects data centre demand to increase from around 1.5 GW in 2025 to 5-8 GW by 2030. Cummins India's leadership in high-horsepower gensets, support from its global parent and localisation capabilities are expected to help the company capitalise on this opportunity.

The brokerage is also positive on the aftermarket business, which accounts for about 30% of revenue. It expects growth to accelerate as CPCB IV+ products move out of the warranty period from the first quarter of FY27, creating higher demand for servicing. HSBC believes the increasing complexity of engines, along with greater use of electronics and telematics, should improve visibility for the aftermarket business.

On exports, HSBC believes the worst is behind the company. It expects the recovery to be aided by rising demand for CPCB IV+ equivalent emission-compliant engines, easing geopolitical disruptions and the normalisation of inventory levels.

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