Cummins India shares came under pressure on Thursday after the company reported a mixed set of June quarter earnings, with strong revenue growth overshadowed by a decline in profit and a sharp contraction in operating margins.
The stock fell as much as 4.38% to an intraday low of Rs 5,171. At 9:21 am, it was trading 2.38% lower at Rs 5,279.35, while the BSE Sensex was up 0.2% at 78,736.
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For the quarter ended June, Cummins India reported a 7.8% year-on-year (YoY) decline in net profit to Rs 543 crore, compared with Rs 589 crore in the year-ago period.
Revenue from operations rose 17.5% to Rs 3,426 crore in Q1FY27 from Rs 2,916 crore in Q1FY26, reflecting healthy demand across its business segments.
However, the company's operating performance weakened. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 2.5% annually to Rs 617 crore from Rs 633 crore, while the EBITDA margin narrowed to 18% from 21.7% a year ago, indicating pressure on profitability despite robust topline growth.
The margin contraction suggests higher costs and weaker operating leverage weighed on earnings, offsetting the benefit of stronger sales.
Brokerage View
Nomura maintained its 'Neutral' rating on Cummins India with a sum-of-the-parts (SoTP)-based target price of Rs 6,000. The brokerage said the company's demand environment remains healthy, supported by end-user segments such as data centres, real estate, manufacturing and quick commerce.
However, it noted that the June quarter margin contraction was steeper than expected due to commodity cost headwinds. Nomura said a recovery in margins will depend on the company's pricing actions and the trajectory of input cost inflation.
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