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Cummins India hosted a conference
call on Feb 8, 2024. In the conference call the company was represented by Ashwath
Ram, Managing Director.
Key takeaways of the call
Domestic sales was up 36% to Rs
2177 crore and exports was down by 40% to Rs 325 crore.
Segment wise domestic sales breakup
for Q3FY24 was Domestic PowerGen was RS 1073 crore, up 51%YoY & up 121%QoQ;
Domestic Distribution business were Rs 662 crore, up 26%YoY, up 21%QoQ; Domestic
Industrial were Rs 212 crore, up 20%YoY & up 37%QoQ. On export sales, the HHP exports were Rs 138
crore (down 38%YoY, down 48%QoQ), Low HP exports were Rs 147 crore (down
44%YoY, down 30%QoQ)
Expect double digit growth in
sales for FY24 from FY23 levels.
Export demand softening across
all geographies. And more over this quarter is typically an inventory
correction quarter. The softening of
demand globally seems have bottomed out. The
company has cut back the inventory and should start picking up and how much it
will pickup is not yet known considering the continued challenge in the form of
Red Sea issues.
Strong domestic demand across various segments
of the business of the company. Confident
of growing the current domestic growth cycle.
PowerGen market of the company
grew by 29% and of which the volume growth is in excess of 20%. Data centre, mfg, realty both commercial,
hospitals etc are the growth drivers for the company in gensets.
Construction market that is
underperforming despite infra spending for few years has done some catch-up in
Q3FY24. The compressor is cyclical. Mining has underperformed from its
potential.
Aspirational growth continues to
be two times of GDP growth and profit margin growth target is by 100 bps for
FY25.
CPCB IV+ full implementation is
only going to happen by June 2024. So the company has been selling CPCB IV+ products only in
some limited markets, the markets where the regulation has already been
implemented. So far little over 3000 gensets of CPCB 4+ was sold by the company
in the market with slightly better realization.
Capacity utilisation for cpcb 4+
products is low and once cpcb 2 product out of market then only the real cost
structure will get absorbed and real margin will be known.
Capacity utilisation is at about
57% so no new capex is required.
Ship to go around horn of Africa
due to Red Sea issue and that has increased the travelling time and some
orders/shipping were deferred by couple of weeks and slight increase in
logistics cost.
Global supply of electronics is not yet
normalized upto 90% it has but the balance 10% is still a niggling challenge.
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