Cummins India tumbles after weak Q2 results

Cummins India fell 6.46% to Rs 541.30 after consolidated net profit fell 10.61% to Rs 182.93 crore on 11.24% decline in net sales to Rs 1,297.30 crore in Q2 September 2019 over Q2 September 2018.

The announcement was made during trading hours today, 24 October 2019.

Domestic sales in the current quarter stood at Rs 947 crore, falling 6% over the same quarter last year and sliding 4% compared to preceding quarter.

Exports for the current quarter was reported at Rs 337 crore, declining 25% over the same quarter last year and improved 3% over the preceding quarter.

Ashwath Ram, the managing director of Cummins India, has said that, "The current sluggishness in the Indian economy arises from several factors including the prevailing liquidity situation, delays in awarding of infrastructure projects, banking sector including the shadow banks continuing to sort through their funding constraints. These factors have all resulted in reduction in demand across our key segments in the domestic business.

In our estimation this is likely to play out further for some time with a gradual revival thereafter. The Government has already undertaken significant actions to boost the economy, including allocating incremental funds to the execution of infrastructure projects, easing out liquidity as well as reduction in corporate tax rate, accompanied by interest rate cuts.

Our confidence on the medium to long term outlook on domestic sales, especially from the infrastructure sectors is high, once the fund allocations from the fiscal union budget, start to positively impact this sector.

Export markets have continued to display softness in recent quarters, arising from global economic challenges. In this quarter we also experienced decline in certain markets within the global Power generation business, based on difficulties that some of these economies are now experiencing.

We have initiated internal actions to curtail overall spending to essential only, as well as improving on the efficiency of our internal processes and product coverage, creating a strong environment of cost consciousness.

We continue to be positioned to outperform in our industry and continue investing judiciously in product enhancements, increasing our customer focus, while maintaining productivity and quality as strong focus areas, as we continue delivering value to all our stakeholders," he added.

Meanwhile, the S&P BSE Sensex was down 194 points or 0.50% to 38,865.22.

On the BSE, 98,937 shares were traded in the counter so far compared with average daily volumes of 13,999 shares in the past two weeks. The stock hit an intraday high of Rs 590.20 and an intraday low of Rs 538.75 so far during the day.

The stock hit a 52-week high of Rs 885 on 16 January 2019. The stock hit a 52-week low of Rs 590.20 on 24 October 2019.

Cummins India is a manufacturer of diesel and natural gas engines, generator sets and related services. The firm operates through two segments: engines and lubes. Its three businesses include engine business, power systems business and distribution business.

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