01 — At a Glance
The Diesel Engine Maker That’s Trading Like a Semiconductor
- Q3 FY26 Revenue₹3,006 Cr
- Q3 FY26 PAT₹486 Cr
- Q3 EPS (₹)17.53
- Annualised EPS (Q3×4)₹70.12
- FY25 Full-Year EPS₹72.15
- Book Value₹285
- Price to Book16.9x
- 52-Week High / Low₹4,987 / ₹2,580
- Return (1-Year)+65.6%
- OPM (Q3)21.4%
Auditor’s Take: Cummins India just posted Q3 FY26 revenue of ₹3,006 crore with PAT of ₹486 crore at a stunning 21.4% operating margin. The stock is trading at 57.1x P/E. For context: that’s the kind of valuation you’d expect for a SaaS hypergrowth story, not a diesel genset manufacturer. Yet here we are. Revenue growth is nearly flat YoY (–1.3%). PAT growth is +4.4% QoQ but –12% YoY post-exceptional items. Yet somehow, a company known for engines, not miracles, commands a market cap of ₹1.33 lakh crore. The math doesn’t add up. Or maybe it does. And that’s scarier.
02 — Introduction
A Diesel Engine Maker That’s Somehow Become a Darling
Cummins India makes diesel engines. And generator sets. And marine propulsion systems. And now battery energy storage systems. And defence platforms. And railway power cars. Basically: if you need something loud, heavy, reliable, and diesel-powered, Cummins is your guy.
The company is 51% owned by Cummins Inc., the USA-based engine behemoth with a 100-year history and customer lists that read like a who’s who of global infrastructure. The rest? Public shareholders, mutual funds, and a sprinkle of FIIs who apparently think diesel gensets are the next cryptocurrency.
For most of its public life, Cummins India has been the quiet overachiever: solid ROCE (36%), strong margins (20%+ OPM), near-debt-free balance sheet, and a distribution network so vast it makes other industrial companies weep. Yet the stock languished for years at boring valuations until suddenly — somewhere in 2024 — the market decided that India’s data centre boom, electrification mega-trends, and railway capex were going to make this stock 66% richer in 12 months. Was that rational? Let’s find out.
Concall Note (Feb 2026): “For financial year ’27, we will target double-digit growth.” — Cummins India Management. Translation: We’re not there yet. But we’re bullish on data centres, batteries, and railways. Diesel isn’t dying. It’s just evolving.
03 — Business Model: Engines, Generators, and the Occasional Data Centre Pray
81% Engines. 19% Lubes. 100% Betting on Infrastructure.
Cummins India runs two core segments: (1) Engines (81% of FY25 revenue) and (2) Lubes (19% of FY25 revenue, run through Valvoline Cummins JV).
The engines business is glacially diverse. Power Generation (gensets) accounts for a decent chunk — delivering 23,000+ units in FY25, ranging from small backup sets to giant 2,500 kVA beasts for data centres. Then come Industrial engines: railways (LHB power cars), mining (dump trucks, excavators), oil & gas (compressors), defence (tank prototypes), construction (dozers, graders), and marine (warships, cargo vessels). It’s as if management said, “Let’s be in every business that requires a loud engine,” and then actually did it.
Distribution happens through 450+ service touchpoints, 116 highway dealerships, and OEM partnerships so deep they make competitors cry. Domestic revenue: 83% in FY25 (up from 73% in FY23). Exports: 17% (down from 27% in FY23). The story is clear: India is the golden goose. Abroad is volatility.
Engines Revenue81%FY25 Split
Power Gen23,000+Units FY25
Dealer Network127Power Gen (↑ from 113)
Domestic Revenue83%FY25 (vs 73% FY23)
The Real Story: Cummins isn’t just selling engines. It’s selling durability in a market obsessed with shortcuts. A diesel genset runs for 10+ years without drama. Data centre operators need reliability more than they need cost optimization (when the grid fails, you lose ₹10 crores per minute). Diesel delivers that promise in ways no alternative has yet mastered. This is the moat.
💬 Have you ever lost power for an hour? Did you think about how much money vanished? That’s the exact customer Cummins is selling to.
04 — Financials Overview
Q3 FY26: The Numbers Game
Result type: Quarterly Results | Q3 FY26 EPS: ₹17.53 | Annualised EPS (Q3×4): ₹70.12 | Full-year FY25 EPS: ₹72.15
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 3,006 | 3,096 | 3,170 | -1.3% | -5.2% |
| Operating Profit | 643 | 598 | 695 | +7.5% | -7.5% |
| OPM % | 21% | 19% | 22% | +200 bps | -100 bps |
| PAT (pre-exceptional) | 502 | 509 | 587 | -1.4% | -14.5% |
| PAT (post-exceptional) | 486 | 558 | 622 | -12.9% | -21.9% |
| EPS (₹) | 17.53 | 20.15 | 22.45 | -13.0% | -21.9% |
The Exceptional Item Sleight of Hand: Q3 FY26 saw an ₹125 crore exceptional loss (pre-listed subsidiary sale). Strip that out, and pre-exceptional PAT is ₹502 crore, down just 1.4% YoY. But when you post-exceptional it to the public, PAT is ₹486 crore, down 12.9% YoY. On the call, management was clear: revenue is near-flat YoY but margins expanded 200 bps. The exceptional item is a one-timer. Don’t panic. But also don’t ignore.
05 — Valuation: Fair Value Range
Is ₹4,801 a Bargain or a Bubble?
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