Cummins India Limited — Q1 FY26 earnings call

Call held 8 Aug 2025

Management summary

Cummins India delivered a strong Q1 FY26, with sales up 26% YoY and PBT after exceptional items up 40% YoY, driven by broad-based growth across domestic Powergen and distribution segments. Volumes have stabilized at pre-CPCB IV+ levels, and pricing is holding. While exports remain cautiously optimistic due to geopolitical uncertainties, the company is focused on cost optimization and sees sustained demand in key domestic segments like data centers and quick commerce.

Highlights

  • Sales grew by 26% YoY to INR 2,859 crores, driven by strong domestic (25% YoY) and export (34% YoY) performance.

  • Profit Before Tax (PBT) increased by 32% YoY to INR 726 crores, with PBT after exceptional items showing an even stronger growth of 40% YoY to INR 770 crores.

  • Powergen domestic sales saw robust growth of 31% YoY, reaching INR 1,056 crores, indicating strong core G-Drive demand.

  • Distribution business sales increased by 19% YoY to INR 777 crores, supported by better penetration in Powergen and railways.

  • Volumes have returned to pre-CPCB IV+ levels, and pricing in the market appears to have settled.

Concerns

  • Management remains 'cautiously optimistic' regarding exports due to ongoing geopolitical uncertainty and global tax and trade policies.

  • Competition is noted to be present across all nodes, including higher horsepower segments, potentially impacting pricing and margins.

  • The launch of the BESS solution is recent, and the order board is still being built, with no immediate plans for manufacturing footprint or specific TAM figures.

Key financials

  1. Sales ₹2,859 Cr +26%YoY
  2. Domestic Sales ₹2,336 Cr +25%YoY
  3. Exports ₹523 Cr +34%YoY
  4. Profit Before Tax ₹726 Cr +32%YoY
  5. PBT after exceptional items ₹770 Cr +40%YoY

What they filed

Q1 FY27: revenue up 17.9%, net profit down 7.8% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,492 3,086 2,457 2,907 3,170 +27%3,055 −1%3,011 +23%3,426 +18%
EBITDA481 600 520 624 695 +44%634 +6%642 +23%616 −1%
Net profit451 514 521 589 638 +41%453 −12%650 +25%543 −8%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Powergen Domestic
    ₹1,056 Cr Sales21% QoQ Growth
  • Distribution Business
    ₹777 Cr Sales23% QoQ Growth
  • Industrial Domestic Business
    ₹418 Cr Sales10% QoQ Growth
  • High Horsepower Exports
    ₹257 Cr Sales18% QoQ Growth
  • Low Horsepower Exports
    ₹225 Cr Sales5% QoQ Growth
  • Industrial Segment Breakdown (Q1 FY26)
    ₹147 Cr Construction₹148 Cr Rail₹56 Cr Compressor
  • Powergen HHP/MHP/LHP Breakdown (Q1 FY26)
    ₹84 Cr Low Horsepower₹229 Cr Medium Range₹115 Cr Heavy Duty₹628 Cr High Horsepower
  • Data Center Contribution to Powergen
    15% Share of Overall Powergen Sales
  • CPCB IV+ Contribution to Domestic Powergen
    60% Share of Domestic Powergen Business

Order book

low confidence
Management noted that the order board for the newly launched BESS solution is still being built and that there is a robust order board for data centers. No specific quantified order book or inflow figures were provided.

Source: Q&A

Guidance & targets

Revenue

  • Full Year Revenue Growth Revenue · full year 2025-'26 · Medium confidence double-digit growth
    Remaining cautiously optimistic, we anticipate having double-digit growth in the full year 2025-'26.

    — Shveta Arya, Managing Director

Profitability

  • Gross Margin Sustainability Profitability · ongoing · Medium confidence sustain gross margin
    On the gross margin side, we did get a lot of leverage benefit in this quarter. So if the volumes continue, we expect to sustain the gross margin from this perspective.

    — Shveta Arya, Managing Director

What to watch in Q2 FY26

BESS Solution Order Board Development

next quarter
Current Order board still being built
Target Quantified order bookings or significant progress in customer adoption

Why it matters

To assess the commercial traction and market acceptance of the newly launched BESS solution.

We have just launched the BESS solution in India. We are still building the order board.

Risks & concerns

  • Geopolitical uncertainty and global trade policies

    medium

    Ongoing geopolitical uncertainty and global tax and trade policies make the export outlook 'cautiously optimistic'.

    Management acknowledged

  • Competition in all nodes

    medium

    Competition is present across all nodes, including higher horsepower segments, which requires continuous focus on cost optimization and value proposition.

    Management acknowledged

  • Impact of US tariffs on exports

    medium

    Analyst raised concern about potential US tariffs; management is evaluating the impact, noting a diversified portfolio reduces overall exposure.

    Analyst acknowledged

Q&A highlights

7 direct
BESS Solution Launch and Market Opportunity Direct
We have just launched the BESS solution in India. We are still building the order board. We are meeting customers at this point in time to share our value proposition on the BESS. So just recently launched, the order board is just getting built. ... As of now, we do not see a risk of cannibalization.

Analyst sought clarity on the new BESS solution's market strategy, potential cannibalization, and manufacturing plans, which management addressed by confirming early-stage order building and no perceived cannibalization.

Asked by Parikshit Kandpal

Powergen Growth Drivers Direct
Yes. Parikshit, this is core G-Drive growth. There's been a lot of focus across all segments in the market, a lot of stabilization in the CPCB IV+ product and good order building and execution. I would say, great execution as well to deliver what the market needed across the board.

Analyst questioned if the strong Powergen growth was due to one-off projects; management clarified it was broad-based core G-Drive growth and strong execution.

Asked by Parikshit Kandpal

Pricing Environment and Stability Direct
From a volume perspective, we are back to pre-CPCB IV+ volumes now. So we have reached those volumes in the market now. And from a pricing perspective, I think there is now a good settlement of pricing in the market. There is a lot of competition still and that will continue. But pricing more or less seems to have settled.

Analyst inquired about pricing trends; management confirmed volume recovery and a settled pricing environment despite ongoing competition, indicating margin stability.

Asked by Parikshit Kandpal

Sustainability of Export Growth Partial
I would say exports, we are still cautiously optimistic, Nitin. There are still various geopolitical issues going around. I would say the reason why exports have been performing for us is because we've been focusing on end markets, what do they need, what products they need.

Analyst questioned the sustainability of export growth given past uncertainties; management reiterated a cautious but focused approach due to geopolitical issues, suggesting continued volatility.

Asked by Nitin Arora

Distribution Business Growth and New Products Direct
Yes, thanks for the question, Umesh. Umesh, you asked about the distribution business growth and is it primarily due to these new products? I would say that the distribution business growth is primarily due to our better penetration in Powergen and railways, better execution and it's broad-based. The new products have started to contribute. But I would not say that the growth is primarily based on new products.

Analyst sought details on the drivers of distribution growth and the contribution of new products; management clarified it's broad-based penetration and execution, with new products contributing but not being the primary driver.

Asked by Umesh Raut

Impact of CPCB IV+ on Aftermarket Business Direct
You are absolutely right. That gives a better opportunity because the products are technologically more advanced than what we had in the CPCB II era. So the products are more advanced and they will require better aftermarket support and technically strong teams on the ground to help our customers. So you're right, it could lead to better opportunities.

Analyst asked if CPCB IV+ would consolidate aftermarket in favor of branded players; management agreed, highlighting the need for advanced support for technologically complex products.

Asked by Umesh Raut

Data Center Demand Outlook Direct
The demand from data centers is continuing, yes. I specifically did not call out data centers because that has been steady for the last few quarters. I only highlighted some of the segments that actually did really well in this quarter. But yes, data center demand is steady and continuing for the time being.

Analyst sought confirmation on the continuity of data center demand; management affirmed steady and continuing demand, reinforcing a key growth segment.

Asked by Rahul Gajare

Hydrogen Electrolyzers for Power Backup Direct
Hydrogen electrolyzers are not for power backup. Hydrogen electrolyzers are just to generate hydrogen for the customers. So that is not something that we've heard too much on in the market in the recent past.

Analyst inquired about hydrogen electrolyzers for power backup; management clarified their purpose (hydrogen generation) and noted limited market activity for this application, correcting a potential misconception.

Asked by Parikshit Kandpal

2 min read 7 chapters

Detailed narrative

Q1 FY26 Financial Performance Overview

Cummins India reported robust financial results for Q1 FY26, with sales reaching INR 2,859 crores, marking a 26% year-over-year increase. Domestic sales grew by 25% to INR 2,336 crores, while exports saw a significant 34% rise to INR 523 crores. Profit Before Tax (PBT) stood at INR 726 crores, up 32% YoY, and PBT after exceptional items surged by 40% YoY to INR 770 crores, indicating strong operational leverage and effective cost management.

Segmental Growth Drivers

The Powergen domestic segment was a key growth driver, with sales increasing by 31% YoY to INR 1,056 crores, attributed to core G-Drive demand and broad-based market stabilization. The distribution business also performed well, growing 19% YoY to INR 777 crores, driven by improved penetration in Powergen and railway segments. Industrial domestic business sales grew 12% to INR 418 crores, with strong contributions from Construction (INR 147 crores) and Rail (INR 148 crores) segments.

New Product Initiatives: BESS Solution and Hotel Load Converter

Cummins India recently launched its Battery Energy Storage System (BESS) solution in India, primarily targeting C&I customers. The company is currently building its order board and showcasing its value proposition, with no immediate plans for a manufacturing footprint. Management does not foresee cannibalization with existing genset business. The hotel load converter product is still undergoing field trials but is expected to enter serialized production and contribute to sales in the coming quarters.

Exports Outlook and Strategy

Despite a 34% YoY growth in exports, management remains 'cautiously optimistic' due to persistent geopolitical uncertainties and global trade policies. The growth was attributed to focused efforts on specific end markets and product positioning rather than a broad market recovery. The company is evaluating the potential impact of US tariffs, noting that its diversified export portfolio helps mitigate risks.

CPCB IV+ and Aftermarket Opportunities

Volumes have returned to pre-CPCB IV+ levels, with approximately 60% of the domestic Powergen business now comprising CPCB IV+ engines. Management believes that the technologically advanced CPCB IV+ products present better aftermarket opportunities, as they require more sophisticated support and technically strong teams, potentially leading to consolidation in favor of branded players in the aftermarket segment.

Capital Expenditure and Capacity Utilization

The company has been continuously investing in capital expenditure over the past few years for line upgrades and expansions to support domestic and export growth. Current capacity utilization stands at 65% to 70%. While no specific capex figures for FY26 were provided, management indicated a continuation of this investment strategy to fuel future growth and maintain operational efficiency.

Overall Outlook and Economic Environment

Cummins India anticipates double-digit growth for the full year 2025-26, maintaining a cautiously optimistic stance. The domestic economy is viewed as stable, with India's GDP estimated at 6.5% for FY26. Management expects continued demand from segments like quick commerce, data centers, and government infrastructure spending, supported by economic policy reforms and a focus on infrastructure development.

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