Cummins India share price sheds 6% amid cautious management commentary

Cummins India share: the sharp rise in global metal prices is posing a challenge in maintaining gross margins, Cummins India management said

Cummins India share price: Cummins India share price fell 6.4 per cent to hit an intraday low of Rs 3,587.65 apiece on the BSE on Thursday. The slide comes as the management turned pessimistic on exports due to global uncertainties.

In its post March quarter result commentary, Cummins India management said "Exports might see an impact in the near-term due to global economic uncertainties. The company, however, will closely monitor the results of geopolitical events unfolding in different parts of the world and their impact on global demand and supply chains."

That apart, the sharp rise in global metal prices is posing a challenge in maintaining gross margins, Cummins India management said in their Analysts' Call earlier today.

At 2:30 PM, Cummins India share price was trading at Rs 3,605.8 per share, down 5.9 per cent, as against a 0.8-per cent dip in the benchmark S&P BSE Sensex.

Meanwhile, in the January to March quarter (Q4) of financial year 2023-24 (FY24), Cummins India reported a standalone profit after tax of Rs 562 crore, up 76 per cent year-on-year (Y-o-Y), and 23 per cent quarter-on-quarter (Q-o-Q).

Its total sales for the quarter came at Rs 2,269 crore, clocking a growth of 20 per cent Y-o-Y, but down 9 per cent sequentially. These were dragged by exports, which came at Rs 344 crore for the quarter, down 30 per cent Y-o-Y. Export sales, however, were up 6 per cent over the December quarter.

Domestic sales, on the other hand, stood at Rs 1,925 crore in Q4FY24, up 38 per cent Y-o-Y, but down 12 per cent Q-o-Q.

That said, gross margin for Cummins India at 36 per cent saw a healthy ~330bp Y-o-Y expansion, presumably owing to a higher contribution of CPCB IV+ products in the revenue mix.

Ebitda margin was at a record 23.5 per cent (up 660bp/230bp Y-o-Y/Q-o-Q) owing to a sharp decline (of 32 per cen Y-o-Y) in other expenses.

"We would require more clarity regarding any one-offs in the same," said analysts at Motilal Oswal Financial Services.