Cummins India, a subsidiary of Cummins Inc., is a renowned leader in the manufacturing of engines, power generation systems, and related technologies. Established in 1962, Cummins India has consistently demonstrated a strong commitment to innovation, quality, and sustainability. This article provides a comprehensive financial analysis of Cummins India, highlighting its historical performance, current financial position, and future predictions.
Table of Contents
Lets Checkout the Dashboard for Balance Sheet and lets understand step by step
Sales, Net Profit & Operating Profit
- Sales: Cummins India has shown a steady increase in sales, from ₹5,112 Cr in March 2018 to a projected ₹9,822.61 Cr in March 2025.
- Net Profit: The net profit has grown from ₹712 Cr in March 2018 to a forecasted ₹1,930.35 Cr in March 2025.
- Operating Profit: Operating profit has risen from ₹738 Cr in March 2018 to an anticipated ₹1,956.55 Cr in March 2025.
Operating Profit Margin (OPM %)
- The operating profit margin has improved significantly, increasing from 14.44% in March 2018 to a predicted 20.13% by March 2025.
Earning Per Share
- The EPS has shown a positive trend, growing from ₹25.68 in March 2018 to an estimated ₹67.94 in March 2025.
Return on Equity (ROE)
- ROE has seen variations, peaking at 26.03% in March 2023, with an expected slight dip to 25.86% by March 2025.
Examine the graph below to observe the growth trends in Cummins India’s assets and liabilities over the years.
Asset Distribution
- CWIP (Capital Work In Progress): ₹97 Cr
- Fixed Assets: ₹2,302 Cr
- Investments: ₹1,642 Cr
- Other Assets: ₹4,930 Cr
The majority of Cummins India’s assets are in Other Assets (52%), followed by Fixed Assets (24%) and Investments (17%). The allocation towards CWIP indicates ongoing projects that are expected to enhance future capabilities.
Liability Distribution
- Borrowings: ₹127 Cr
- Equity Capital: ₹55 Cr
- Other Liabilities: ₹2,231 Cr
- Reserves: ₹6,557 Cr
Cummins India’s liabilities are primarily composed of Reserves (65%) and Other Liabilities (22%). Borrowings are relatively low, indicating a strong equity base and prudent financial management.
Strengths and Weaknesses
Strengths
- Consistent Revenue Growth: Steady increase in sales over the years.
- High EPS: Growing Earnings Per Share, reflecting profitability.
- Diverse Asset Base: Significant investments and fixed assets.
- Strong ROE: High Return on Equity, indicating efficient use of equity capital.
- Industry Leadership: Reputable brand with extensive experience in the industry.
Weaknesses
- Fluctuating Profit Margins: Variability in Operating Profit Margin suggests operational challenges.
- High Liabilities: Significant other liabilities could pose financial risks.
- Market Volatility: Sensitivity to market conditions can affect performance.
- Global Economic Dependencies: Reliance on global markets introduces external risks.
- Investment Risks: Potential risks associated with ongoing investments and projects.
FAQs on Fundamental Analysis
What is the expected EPS for Cummins India in March 2025?
How has Cummins India’s Operating Profit Margin changed over the years?
What is the predicted net profit for Cummins India in March 2025?
What are the main components of Cummins India’s asset distribution?
What are the potential risks associated with Cummins India’s financial performance?
How does Cummins India’s ROE compare over the years?
What is the composition of Cummins India’s liabilities?
How does Cummins India’s fixed assets contribute to its overall asset base?
Checkout the performance of CUMMINSIND stock price starting from 2018 to till date
Conclusion
Cummins India’s financial analysis reveals a strong growth trajectory with significant increases in sales, net profit, and EPS. The company’s commitment to innovation and sustainability, combined with prudent financial management, has positioned it well for future growth. While there are challenges such as high liabilities and market volatility, Cummins India’s strengths in revenue growth, profitability, and asset management make it a resilient player in the industry.
By continuing to focus on sustainable practices and addressing financial risks, Cummins India can maintain its market leadership and continue to deliver value to its stakeholders.
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