Cummins India Q2FY26 Results – Powering Profits with Diesel, Drama, and Data Centres
(Because apparently, the only thing growing faster than Cummins’ revenue is their generator wattage chart.)
1. At a Glance
Cummins India Ltd, the power-engine colossus backed by Cummins Inc. USA, just fired on all cylinders in Q2FY26, reporting a record quarterly revenue of ₹3,170 crore and PAT of ₹622 crore, clocking a 38.5% YoY jump in profit. The stock, sitting at ₹4,292, has been humming like a well-oiled diesel engine—up 56.8% in the past six months.
With a market cap of ₹1.19 lakh crore, ROE of 28.2%, and a dividend yield of 1.2%, Cummins isn’t just making generators—it’s printing cash. The company has a 36.3% ROCE, nearly zero debt (₹24 crore), and a current ratio of 3.16, which is basically corporate-speak for “cash-rich and chill.”
Meanwhile, management has been busy rotating MDs faster than a turbine: Shveta Arya took over as Managing Director in August 2024 after Ashwath Ram’s resignation, proving once again that even leadership at Cummins runs on replacement parts.
2. Introduction
Picture this: India’s data centres, factories, metros, and defense units all silently running because of one company that builds the beasts powering them. Now imagine that company casually pulling ₹2,304 crore in annual profit with a 20.8% return on assets, while its stock trades at a P/E of 51.6.
Welcome to Cummins India Ltd, where the engines don’t stop, and neither do the dividends (71% payout ratio—because why hoard when you can share?).
The company’s parent, Cummins Inc., holds 51%, so half the profits sail off to America while Indian investors get to flex a clean, blue-chip, dividend-paying machine. But hey, as long as the generators hum and the ROE glows, who’s complaining?
The stock’s journey from ₹2,580 to ₹4,495 in a year is a reminder that boring industrials can sometimes be sexier than startups—if they’re printing 20% sales growth and 35% ROCE.
Question: Is Cummins India the Tesla of diesel engines, or just India’s ultimate “steady compounder”? Let’s crank open the hood and find out.
3. Business Model – WTF Do They Even Do?
Cummins India doesn’t make anything “cool” like iPhones or EV scooters. It makes massive diesel and alternative-fuel engines—the kind that power metros, railways, mining trucks, ships, and data centres. Basically, if it moves or needs power, Cummins probably has an engine inside it.
Their product range goes from 2.8 liters to 100 liters, and their generator sets can go up to 3750 kVA. Translation: from your office backup genset to the thing keeping a nuclear submarine alive, Cummins has it covered.
Let’s break it down (without breaking down like a bad engine):
Engines (81% of FY25 revenue) – For power generation, mining, defense, construction, and railways.
Lubes (19% of FY25 revenue) – Through Valvoline Cummins, a 50:50 JV with Valvoline Inc. USA, because why sell just engines when you can also sell the oil they guzzle?
Their distribution network has 450+ service points, 116 highway dealerships, and four battery dealerships (because even diesel dads are flirting with electric now).
R&D spend? ₹7 crore in FY25—pocket change, but remember, daddy Cummins Inc. handles most of the innovation.
And yes, they even launched Battery Energy Storage Systems this year—because someone in marketing clearly said, “We need to sound green before ESG funds ghost us.”
Annualised EPS = ₹22.45 × 4 = ₹89.8, giving a P/E of ~47.7 (at ₹4,292 CMP).
Commentary: Cummins’ profits are growing faster than India’s electricity demand during IPL season. EBITDA margin sits pretty at 22%, and PAT margin is a juicy 19.6%. Even the QoQ growth looks diesel-powered steady—no jerks, no knocks.
5. Valuation Discussion – Fair Value Range (Educational Only)
Let’s nerd out.
a) P/E Method EPS (TTM): ₹83.5 Industry P/E: 39.2 Cummins P/E: 51.6
If we assume fair P/E band = 40x–50x, Fair Value = 83.5 × (40–50) = ₹3,340–₹4,175
b) EV/EBITDA Method EV = ₹1,17,202 Cr EBITDA (TTM) = ₹2,441 Cr EV/EBITDA = 48x
If fair band = 30x–40x (based on peers like Kirloskar Oil, KSB, Ingersoll Rand), Fair Value = 2,441 × (30–40) = ₹73,230–₹97,640 Cr, implying ₹2,670–₹3,560/share.
c) DCF (Simplified) Assume FCFF = ₹1,685 Cr (FY25 OCF), growing 10% for 5 years, discount rate 10%, terminal growth 4%. DCF value ≈ ₹95,000–₹1,05,000 Cr, ≈ ₹3,460–₹3,820/share.
🧮 Educational Fair Value Range: ₹3,300 – ₹4,200/share. (Disclaimer: This is purely educational, not investment advice. Unless you want to blame Excel later.)
6. What’s Cooking – News, Triggers, Drama
New MD: Shveta Arya takes over from Ashwath Ram (Aug 2024). The leadership baton
