💰 Financial Performance

Revenue Growth by Segment

Total sales for Q2 FY26 reached INR 3,122 Cr, up 28% YoY. Domestic sales grew 28% YoY to INR 2,577 Cr, while Exports grew 24% YoY to INR 545 Cr. Data Center revenue accounted for 40% of the Power Generation segment in Q2 FY26.

Geographic Revenue Split

Domestic India market contributes 82.5% (INR 2,577 Cr) and Exports contribute 17.5% (INR 545 Cr) of total Q2 FY26 revenue.

Profitability Margins

Gross margins are targeted in the 35% to 36% range. For FY 2024-25, the Operating Profit Margin was 28.9% and the Net Profit Margin was 18.43%.

EBITDA Margin

Operating Profit Margin stood at 28.9% for FY 2024-25, showing stability compared to 28.8% in the previous fiscal year.

Credit Rating & Borrowing

The company is debt-free as of FY 2024-25, having fully repaid its borrowings, resulting in a Debt-Equity ratio of 0.00 and an Interest Coverage Ratio of 180.81.

⚙️ Operational Drivers

Raw Materials

Commodities including Steel, Copper, and Aluminum are primary inputs; specific percentage of total cost for each is not disclosed.

Import Sources

Specialized engine parts and accessories are imported from the United Kingdom (Cummins Ltd) and the USA (Cummins Inc).

Key Suppliers

Key suppliers include parent company Cummins Inc. (USA) and fellow subsidiary Cummins Limited (UK).

Raw Material Costs

Raw material costs are rising as commodity prices 'head north'; the company manages this through a 35-36% gross margin target and favorable product mix.

Manufacturing Efficiency

Efficiency is driven by leverage gains from high execution volumes and a favorable shift in product mix.

📈 Strategic Growth

Expected Growth Rate

10%+

Growth Strategy

Growth will be achieved by focusing on high-demand segments like Data Centers (contributing 25-30% of 1H FY26 Power Gen revenue), leveraging the transition to technologically complex CPCB IV+ products, and expanding export end-markets despite geopolitical uncertainties.

Products & Services

Diesel and natural gas engines, power generation sets (gensets), powertrain components, filtration systems, aftertreatment devices, and turbochargers.

Brand Portfolio

Cummins

New Products/Services

CPCB IV+ compliant engines and gensets launched to meet new emission standards; Data Center specific power solutions are expected to be a major revenue driver.

Market Expansion

Expansion is targeted in export end-markets for both high and low horsepower ranges, which recently hit a 3-year high.

Strategic Alliances

Strategic integration with parent Cummins Inc. (USA) and Cummins Ltd (UK) for technology and supply chain synergies.

🌍 External Factors

Industry Trends

The industry is shifting toward higher emission standards (CPCB IV+) and increased demand for reliable power in digital infrastructure (Data Centers).

Competitive Landscape

Competitive intensity in the power generation segment is increasing every quarter, pressuring value propositions.

Competitive Moat

Moat is sustained by a robust service network prepared for complex CPCB IV+ products and strong global parentage providing a technological edge.

Macro Economic Sensitivity

The company is sensitive to manufacturing sector growth, which grew 9.1% recently, and overall GDP growth of 8.2%.

Consumer Behavior

Shift toward high-reliability, technologically complex power solutions for infrastructure and data-heavy industries.

Geopolitical Risks

US tariff-related concerns and global trade barriers pose risks to export-oriented units.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by CPCB IV+ emission standards, POSH Act for workplace safety, and SEBI listing regulations for material related party transactions.

Environmental Compliance

Focus on CPCB IV+ emission norm compliance; the company prepared its service network well in advance of the July 2023 launch.

⚠️ Risk Analysis

Key Uncertainties

Commodity price volatility (Steel/Copper) could impact margins by 1-2%; US tariff changes could disrupt export growth trends.

Geographic Concentration Risk

High concentration in the Indian domestic market (82.5% of revenue).

Third Party Dependencies

Significant dependency on Cummins Group entities for parts and engines, with revised RPT limits for CL (UK) at INR 1,826 Cr.

Technology Obsolescence Risk

Risk is mitigated by early adoption and service training for CPCB IV+ technology.

Credit & Counterparty Risk

Debtor Turnover Ratio of 4.73 indicates healthy receivable management and low credit risk.