Cummins India: Citi bets on data centre tailwinds; sees 14% upside

Post Q4 results, Citi Research has reiterated its 'Buy' rating on Cummins India and raised target price to ₹6,700 from ₹5,200. The target implies an upside of 14% from the previous close of ₹5,881.

Shares of engine maker Cummins India fell 3.5 per cent in trade today after the company reported its Q4FY26 numbers. The Nifty Next 50 stock opened on a positive at ₹5,979.50 on the National Stock Exchange (NSE) but soon erased the gains to trade in the red. The stock made a low of ₹5,689. 

As of 1:20 PM, the counter was trading in the red with a cut of 2.6 per cent at ₹5,728. In comparison, the Nifty 50 index was down 0.3 per cent. 

Cummins India, a subsidiary of Cummins Inc., is a manufacturer of diesel and natural gas engines. For the March 2026 quarter (Q4FY26), the company reported a PAT of ₹650 crore. The company had earned a net profit of ₹520 crore in the same quarter a year ago. The profit margin for the reporting quarter stood at 21.9 per cent. 

 

Its total sales for the March 2026 quarter stood at ₹2,963 crore, up 23 per cent on Y-o-Y basis from ₹2,428 crore reported in the March 2025 quarter.  

The company said that its domestic sales were at ₹2,513 crore in Q4, higher by 30 per cent compared to the same quarter last year. Export sales came in lower by 6 per cent Y-o-Y at ₹450 crore in the quarter under review.  READ | Rubicon Research jumps 15% to hit 52-week high on Q4 results, dividend news 

For the entire fiscal year 2026, the company's profit grew by 22 per cent Y-o-Y to ₹2,330 crore, while sales increased by 18 per cent Y-o-Y to ₹11,950 crore. 

Post results, brokerage firm Citi Research has reiterated its 'Buy' rating on the stock and raised its target price to ₹6,700 from ₹5,200, citing data centres and distribution tailwinds to continue. The target price implies an upside of 14 per cent from the previous close of ₹5,881. 

Citi said that Cummins India benefitted from genset deliveries in Q4 for a hyperscaler (FY26 saw hyperscaler linked deliveries in both 1H & 2H, unlike prior years). Also, colocation business is improving as enquiries have seen an increase post October 2025. Non datacentre-linked powergen’s resilience has continued benefitting from a wide bench of independent demand drivers.   READ | Tilaknagar Industries share price falls 7% as company swings to loss in Q4 

High HP grew >50 per cent Y-o-Y in Q$ on datacentre delivery (DCs contributed ~30-35 per cent of powergen revenue). Cummins counters competitive pressures through its end-to-end lifecycle solutions and relatively more localised supply chains. Beyond DCs, resilience continues with relatively newer drivers emerging (such as solar cell manufacturing plants in 4Q and quick commerce previously in FY26), the brokerage said, while highlighting that positive demand commentary from broader peers augurs well.  

The brokerage further said that distribution is likely to see further tailwinds in FY27 and beyond as FY26 base business growth was largely volume led. "In our view, a tailwind is coming up from June 2026 onwards as CPCB IV+ engines begin rolling out of their standard warranty periods. This should help sustain the segment’s high growth rate and also help margins overall."  Citi has revised FY27E and FY28E PAT estimate by 8 per cent 14 per cent, respectively, to factor in higher growth in powergen and distribution. The brokerage expects 21 per cent Ebit CAGR over FY26-29E with average ~35 per cent RoE. 

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