Cummins India Limited — Q2 FY26 earnings call

Call held 7 Nov 2025

Management summary

Cummins India reported a strong Q2 FY26 with sales up 28% YoY to ₹3,122 crores and PBT up 41% YoY to ₹839 crores, driven by robust domestic power generation, particularly data center project execution. However, the Industrial segment faced headwinds from monsoons and slow mining. Management anticipates double-digit revenue growth for FY26 but notes increasing competitive intensity and a softening in export order intake.

Highlights

  • Strong overall sales growth of 28% YoY and 9% QoQ, reaching ₹3,122 crores.

  • PBT before exceptional items increased significantly by 41% YoY and 16% QoQ to ₹839 crores.

  • Domestic Power Generation segment showed robust growth of 49% YoY and 27% QoQ, driven by strong execution in data center projects.

  • Volumes in the power generation market are now back to pre-CPCB IV+ era levels across segments.

  • Rail segment performed well with good orders and execution, contributing ₹120 crores.

Concerns

  • Industrial business sales decreased by 5% YoY and 7% QoQ to ₹387 crores, primarily due to extended monsoons impacting construction and slow mining tenders.

  • Softening of export order intake is observed for the coming quarter due to inventory correction in end markets.

  • Competitive intensity in the power generation segment is increasing month-on-month, potentially impacting margins.

  • Data center project execution is lumpy and the high contribution seen this quarter (40% of power gen sales) is not expected to recur to the same extent in the next half of the year.

Key financials

  1. Sales ₹3,122 Cr +28%YoY
  2. Domestic Sales ₹2,577 Cr +28%YoY
  3. Exports ₹545 Cr +24%YoY
  4. PBT (before exceptional items) ₹839 Cr +41%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

Share of Sales
₹3,021 Cr Total
  • Domestic Power Generation ₹1,340 Cr 44.4%
  • Distribution Business ₹796 Cr 26.3%
  • Industrial Business ₹387 Cr 12.8%
  • High Horsepower Exports ₹279 Cr 9.2%
  • Low Horsepower Exports ₹219 Cr 7.2%

Order book

medium confidence
Order intake for India is more diversified and continues quarter-on-quarter. While the parent company saw record power gen order intake globally, Cummins India did not provide a specific quantified order book for the quarter, noting that data center sales were largely from execution of prior orders and mining orders were slow.

Source: Q&A

Guidance & targets

Revenue

  • Data Center Revenue Contribution Revenue · 1H FY26 · Medium confidence 25-30%
    Overall data center, I could tell you it would happen closer to between 25% to 30%.

    — Shveta Arya, Managing Director

Exports

  • Export Growth Exports · next 5 years · High confidence not double-digit
    Could I share with you that for the next 5 years, we will be able to get double-digit growth? No, because these are not the end markets that we understand as well as the India market.

    — Shveta Arya, Managing Director

Market context

  • Overall Revenue Growth Revenue · FY26 · High confidence double-digit
    Regarding the sales outlook for the full year 2025-'26, we expect to have double-digit revenue growth over the previous fiscal year.

    — Shveta Arya, Managing Director

  • Overall Volume Growth Volume · FY26 · High confidence double-digit
    And just for this year, we are maintaining double-digit growth guidance, and that's the best that I can share at this stage.

    — Shveta Arya, Managing Director

What to watch in Q3 FY26

Sustainability of data center revenue contribution

Next quarter / H1 FY26
Current 40% of power gen sales in Q2 FY26
Target Lower than Q2 FY26, but within 25-30% for 1H FY26

Why it matters

Data center execution was a key driver for Q2 power gen growth, but management indicated its lumpy nature and lower contribution expected in H2.

So I did mention this particular quarter, there was a lot of data center project execution, which we do not see in the next half of the year to that extent.

Risks & concerns

  • Increasing competitive intensity in power generation

    medium

    Competitive intensity is increasing every month/quarter across all power gen segments, requiring continuous evaluation of value proposition.

    Management acknowledged

  • Softening of export order intake due to inventory correction

    medium

    A little bit of softening in export order intake is observed for the coming quarter, largely due to inventory correction in end markets.

    Management acknowledged

  • Lumpy nature of data center project execution

    medium

    High data center contribution this quarter was due to specific project execution and site clearances, which is lumpy and not expected to recur to the same extent in the next half.

    Management acknowledged

  • Geopolitical uncertainties and tariffs

    medium

    Ongoing geopolitical uncertainties and tariff issues may result in short-term fluctuations, requiring a watchful and stable outlook.

    Management acknowledged

  • Impact of extended monsoon on construction segment

    low

    Extended monsoon impacted the construction segment, leading to degrowth in the Industrial business this quarter.

    Management acknowledged

  • Slowdown in mining tenders

    low

    Mining segment saw fewer tenders from Coal India, contributing to the Industrial business decline.

    Management acknowledged

Q&A highlights

5 direct
Order intake for India business, especially power generation, compared to global trends. Partial
From an India perspective, our market from a power gen perspective, our order intake is more diversified. It continues quarter-on-quarter. There is no specific change as I see it in the coming quarters.

Analyst inquired about the local impact of strong global order intake, and management clarified India's more diversified and steady intake without specific quantification.

Asked by Umesh Raut

Pricing, volume trajectory post-CPCB IV+, and contribution from mission-critical applications like data centers. Direct
Across the range in the power gen market, the volumes are now back to pre CPCB IV+ era. The annual volumes that we used to see in the market in CPCB II, we are almost back to the same volumes now across the segments... 40% of the power gen sales in this particular quarter came from data centers.

Management provided key insights into volume recovery and the significant, albeit lumpy, contribution of data centers to power generation sales.

Asked by Umesh Raut

Reasons for the year-on-year decline in the Industrial segment. Direct
One of the impacts is the extended monsoon, which has ended up impacting the construction segment. The largest impact came from the construction segment, where we saw degrowth in this quarter... Also, mining, we did not see as many tenders opening from Coal India, and that has impacted.

Management clearly attributed the Industrial segment's underperformance to specific external factors, providing context for the decline.

Asked by Umesh Raut

Quantifying power generation growth excluding the data center contribution. Direct
So in this particular quarter, if I were to share with you the power gen growth number that you're seeing, approximately 40% of the power gen sales in this particular quarter came from data centers... On the coal power gen side, if I exclude data centers, then we have grown 20% as compared to the same quarter last year.

This question helped disaggregate the power gen growth, revealing a still healthy 20% growth even without the lumpy data center contribution.

Asked by Partikshit

Sustainability of data center growth and why it is considered 'lumpy'. Direct
The orders that we get from our local colo players are largely very well spread out, but some of these big data center orders are not. And that's why that is lumpy business. It depends on site clearances that our hyperscalers are able to get. And then as soon as they get site clearances, our execution capability because these are very, very complex execution projects.

Management explained the inherent lumpiness of hyperscaler data center orders, which is crucial for understanding future revenue predictability from this segment.

Asked by Pulkit Patni

Competitive intensity across different horsepower segments and its impact. Direct
I can definitely say that we encounter more and more of our competition in every deal that we go and look for... We are expecting intensity because there are a lot of players who in India and outside India look at the India market and see that as a good growth engine for them.

Management confirmed increasing competitive pressure across all segments, highlighting a key risk for future margins and market share.

Asked by Aditya Mongia

Medium to long-term outlook for export growth, specifically regarding double-digit growth and data center opportunities outside India. Partial
Could I share with you that for the next 5 years, we will be able to get double-digit growth? No, because these are not the end markets that we understand as well as the India market... So difficult for me to give you that number. And from a data center perspective, I'm sorry, could you repeat your question there?

Management tempered expectations for long-term export growth, citing challenges in understanding international markets and global headwinds, indicating a more cautious outlook for this segment.

Asked by Amit Anwani

2 min read 6 chapters

Detailed narrative

Q2 FY26 Performance Overview

Cummins India reported robust financial results for Q2 FY26, with sales reaching ₹3,122 crores, marking a 28% year-on-year and 9% quarter-on-quarter increase. Profit Before Tax (PBT) before exceptional items also saw significant growth, rising 41% YoY and 16% QoQ to ₹839 crores. Domestic sales contributed ₹2,577 crores, growing 28% YoY, while exports stood at ₹545 crores, up 24% YoY. The company maintains its guidance for double-digit revenue growth for the full fiscal year 2025-26.

Power Generation Segment Dynamics

The domestic power generation business was a key growth driver, with sales increasing 49% YoY and 27% QoQ to ₹1,340 crores. A substantial portion, approximately 40%, of the power generation sales this quarter came from data center project execution. Management noted that volumes across all horsepower ranges (low, medium, high) are now back to pre-CPCB IV+ era levels. However, the data center contribution is considered lumpy and not expected to repeat at the same intensity in the second half of the fiscal year.

Industrial Segment Challenges

The Industrial business faced headwinds in Q2 FY26, experiencing a 5% YoY and 7% QoQ decline in sales to ₹387 crores. This downturn was primarily attributed to the extended monsoon season, which impacted the construction segment. Additionally, a slowdown in tender openings from Coal India affected the mining segment. In contrast, the rail segment performed well, contributing ₹120 crores to sales, benefiting from good orders and execution.

Export Market Trends

Exports grew 24% YoY to ₹545 crores, with high horsepower exports up 40% and low horsepower exports up 11%. However, management indicated a softening in export order intake for the coming quarter, largely due to inventory correction in end markets. The company does not anticipate double-digit export growth over the next five years, citing challenges in understanding international markets and global factors like tariffs, credit availability, and competition from Chinese players.

Competitive Landscape and Margins

Competitive intensity in the power generation segment is increasing consistently across all horsepower ranges. Management acknowledged facing more competition in every deal. Despite this, the company aims to maintain gross margins in the 35-36% range through continuous cost reduction efforts and leveraging its value proposition of technology, innovation, and reliability. Pricing has largely settled post-CPCB IV+ launch, but competitive pressures remain.

Outlook and Risks

Cummins India maintains a stable outlook, projecting double-digit revenue growth for FY26, aligning with India's estimated GDP growth of 6.8% for the same period. Key growth areas include realty, commercial realty, construction, quick commerce, and mission-critical applications. However, the company remains watchful of increasing competitive intensity, the lumpy nature of data center projects, and global geopolitical uncertainties and tariffs, which could lead to short-term fluctuations.

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