Cummins India’s March quarter (Q4FY26) earnings suggest its growth story is increasingly tied to the rise of data centres, extending well beyond its traditional power-generation roots. Investors welcomed the results, pushing the stock to a record high of ₹6,100 on Friday. It was trading around ₹5,750 on Monday.
Total operating revenue rose 23% year-on-year to ₹3,000 crore in Q4FY26, while net profit increased at a similar pace to ₹650 crore. Ebitda margin held steady at 21.3%, underscoring the company’s ability to protect profitability despite higher raw material costs and competitive pressures.
Power demand
A key takeaway from management commentary was the growing contribution of data centres, which require reliable backup power systems and are creating a long-term demand tailwind for Cummins’ high-horsepower generator business. Data centres accounted for 30-35% of domestic power-generation revenue in FY26 and about 35% in Q4FY26. Enquiry momentum has accelerated sharply since October, driven by strong demand from both hyperscalers and colocation operators. As a result, power-generation revenue jumped 48% year-on-year.
Cummins also remains well placed to benefit from India’s infrastructure and digitalization push. With capacity utilization at around 70%, the company has room to grow without taking on significant capital expenditure.
Growth was also supported by demand from pharmaceutical facilities, luxury housing projects, railways and mining, as well as booming themes such as solar-cells and quick-commerce warehouses. The distribution business continued to perform strongly, with revenue rising 21% year-on-year in the quarter, aided by predictive maintenance contracts, retrofits and extended-warranty programmes.
That said, the management’s FY27 guidance was notably measured.
Industrial revenue was flat year-on-year, and analysts at Motilal Oswal Financial Services expect weakness in construction and compressor-related segments to weigh on growth. Even in battery energy storage systems (BESS), where enquiries have picked up, meaningful commercialization remains some distance away.
Geopolitical uncertainty, particularly in West Asia, also continues to cloud export prospects. Export revenue fell 6% year-on-year and nearly 5% sequentially to ₹450 crore. Labour shortages at supplier facilities, rising fuel costs and commodity inflation are emerging as headwinds. Previously booked orders are facing margin pressure, while lead times for new orders have stretched to 3-6 months.
Moreover, after gaining more than 70% over the past year and trading near record highs, much of the optimism appears priced in. Valuation at 57x FY27 earnings based on consensus Bloomberg estimates looks increasingly demanding.