Shares of Cummins India Ltd. rose as much as 3 percent in early trading on Monday after its September quarter results surpassed estimates on all fronts. However, the stock gave up most of its gains within the first hour of trade.
The company's overall topline increased 13 percent from last year to Rs 1,957 crore, led by higher exports which increased 21 percent from last year. Net profit increased 21 percent while operating profit or EBITDA rose 12 percent year-on-year. Margin declined 20 basis points but still managed to surpass a CNBC-TV18 poll of 14.1 percent.
Cummins managed to maintain its operating performance during the quarter despite raw material costs rising 21 percent to Rs 1,154 crore.
Domestic sales during the quarter had increased 11 percent from last year.
Going forward, the company is cautiously optimistic on short-to-medium-term demand but sees sustained demand visibility across domestic and export markets.
Brokerage firm Nomura says that results were better than expectations due to higher operating leverage. It awaits more clarity from the management on the sustainability of the strength in exports.
The management has not provided a revenue guidance for the full year so far.
Parent company Cummins has guided for overall sales growth in India to be at 20 percent for the year.
Nomura has a reduce rating on Cummins India with a price target of Rs 805. It prefers leader Larsen & Toubro within this space.
Shares of Cummins India are fluctuating between gains and losses, currently trading 0.7 percent higher at Rs 1,341.5.
(Edited by : Rukmani Krishna)