Posted on February 6, 2025, by Niftynews
Shares of Cummins India surged by over 5% on February 6, 2025, following the announcement of a significant 900% interim dividend along with strong Q3 FY25 results. The company declared an interim dividend of ₹18 per equity share, significantly boosting investor sentiment. This announcement comes on the heels of the company’s robust performance in the October-December 2024 quarter, which has resulted in a 22% rise in its share price over the last year.
Strong Q3 FY25 Results for Cummins India
Cummins India reported an impressive 11.9% year-on-year (YoY) increase in profit after tax (PAT) for the quarter ending December 31, 2024. The company’s PAT reached ₹558 crore, compared to ₹499 crore in the same quarter last year. Revenue for Q3 FY25 also witnessed a significant rise of 21.8% to ₹3,096 crore, compared to ₹2,541 crore in Q3 FY24.
However, while EBITDA (earnings before interest, taxes, depreciation, and amortization) grew by 10.1%, increasing to ₹589 crore, the EBITDA margin contracted by 205 basis points (bps) YoY, dropping to 19.3% from 21.3% in the corresponding quarter last year. Despite the margin decline, the overall results were strong, driven by strong demand across Cummins India’s key business segments.
900% Interim Dividend Declared
In a remarkable move, Cummins India declared an interim dividend of ₹18 per equity share, representing a 900% payout. This dividend will be paid to shareholders by March 3, 2025, with the Record Date set for February 14, 2025. The 900% dividend payout is seen as a sign of the company’s solid financial health and commitment to returning value to its shareholders. This move has caught the attention of investors, contributing to a significant boost in Cummins India stock performance.
Stock Price Performance
Following the announcement of the 900% interim dividend, Cummins India shares witnessed a surge of as much as 5.3% to reach an intra-day high of ₹3,075.95 on February 6, 2025. This upward movement has extended the stock’s gains over the last three trading sessions, where it rose by 2.4% and 5.6% in the previous two days. The stock has gained almost 22% over the past year, marking a strong recovery after several months of losses.
Despite the recent gains, Cummins India’s stock is still approximately 26% below its peak of ₹4,169.50, reached in June 2024. However, it has advanced by nearly 30% from its 52-week low of ₹2,373.40, recorded in February 2024. These fluctuations reflect the volatile nature of the stock market, yet the positive news has helped to lift investor confidence in the company’s outlook.
Outlook on Global Economic Conditions
Shveta Arya, Managing Director of Cummins India, addressed the company’s performance in light of global economic challenges. She acknowledged that while inflation was easing in most parts of the world, geopolitical uncertainties continue to impact the global economic outlook. In particular, the policies of the US Federal Reserve are expected to play a crucial role in shaping the economic landscape in the coming years.
Despite these uncertainties, Arya pointed to India’s recovery as a bright spot. After experiencing slower growth in Q2 FY25, the Indian economy is showing signs of improvement, with strong GST collections and favorable indicators such as Index of Industrial Production (IIP) and Purchasing Managers’ Index (PMI). These positive trends have contributed to Cummins India’s strong performance and its ability to continue executing a profitable growth strategy.
Business Segments and Performance
Cummins India is widely recognized for its engines, power generation systems, and gensets (generators), which continue to be the company’s primary revenue drivers. The demand for power generation solutions and engines in the Indian market has remained strong, driving the company’s revenue growth. As the company continues to focus on executing its growth strategy, it remains well-positioned to capitalize on expanding opportunities in the Indian energy sector.
Conclusion
The announcement of the 900% interim dividend by Cummins India has garnered significant attention, resulting in a 5% surge in stock price on February 6, 2025. With impressive Q3 FY25 results, a growing dividend payout, and a solid growth strategy in place, Cummins India continues to demonstrate resilience in the face of global economic uncertainties. As the company moves forward with its profitable growth strategy, it remains a key player in the Indian energy market, promising strong long-term prospects for its shareholders.
