Cummins

Cummins India declared a very somber set of Q3FY14 numbers. On a 7% (YoY) decline in net sales at Rs.1001 crore, the company posted a 37% decline in net profit at Rs.147 crore. Yet, the stock price then reacted positively, mainly enthused by three factors – firstly, it declared an interim dividend of 250%, which is Rs.5/share on each Rs.2 face value share held. Secondly, in Q3FY13, the company had an exceptional gain of Rs.47 crore on sale of long term investments thus it was the ‘base effect’ which makes YoY bottomlines look bad. Sequentially, net profit is up 2%. Thirdly, the company has put a tight lid on its costs coming down 6% (YoY) and this helped improve the margins a tad bit. Its EBITDA margin came in at 19.31% v/s 19.14% in Q3FY13.

The company makes engines for power generation, industrial and automotive markets. And given the state of the auto, power and capital goods, things continue to look challenging for the company. It has stated that it does not see any signs of improvement in the Indian capital goods markets though it continues to maintain market share leadership. The company is investing in advanced technologies and solutions, which confirms with its recently announced CPCBII emission compliant generators. It remains a strong MNC, with very little debt and parent company holding 51%. LIC is also a big shareholder with 7.27% stake. Total institutional holding is at 35.18% of which FIIs hold 16.95%.