Despite challenges in the export market, Cummins India remains optimistic and is capitalizing on the strong domestic demand. Despite obstacles like the Red Sea issue, the company is navigating through turbulent times, driven by consistent demand across various markets and industries.
In terms of financial performance in Q3FY24, Cummins India achieved its highest-ever quarterly revenue and profits, mainly due to robust domestic demand. Domestic revenue surged by 36 percent year on year and 60 percent quarter on quarter, with the powergen business witnessing a significant 57 percent increase. However, exports faced a decline of 40 percent year on year due to lower demand and logistical challenges caused by the Red Sea crisis.
EBITDA margins expanded by approximately 244 basis points year on year to 21.4 percent, attributed to factors like higher contribution from CPCB IV+ products, cost controls, and increased scale. Despite a decrease in the export share and a slight increase in expenses as a percentage of revenue, profit after tax grew by 21 percent year on year.
Looking ahead, Cummins India aims for double-digit revenue growth in fiscal year 2024, driven by expectations of demand recovery, especially from industries like engineering and data centers. The company’s early adoption of CPCB IV+ products positions it well, with expectations of increased demand once new pollution norms are implemented in June 2024. The company operates at 60-70 percent capacity utilization currently, leaving room for potential revenue doubling from existing capacity.