Cummins India

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 item^📎s 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.

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.

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.

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 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.

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.