Cummins India in the limelight

Cummins India is in the limelight today. The stock closed yesterday at Rs.439.25 and opened lower at Rs.443; this was as the Q3FY14 numbers, on face value do not look very good. But once the internals of the numbers were understood, the stock sharply spurted up  to an intra day high at Rs.451, and currently remains around the same levels.

The company declared its Q3FY14 numbers late in the evening yesterday. On a 7% (YoY) decline in net sales at Rs.1001 crore, the company posted a 37% decline in net profit at Rs.147 crore. The market was enthused on three counts – firstly, it declared an interim dividend of 250%. Secondly, in Q3FY13, the company had an exceptional gain of Rs.47 crore on sale of long term investments thus it was the ‘base effect’ which makes YoY bottomlines look bad. Sequentially, net profit is up 2%. Thirdly, the company has put a tight lid on its costs coming down 6% (YoY) and this helped improve the margins a tad bit. Its EBITDA margin came in at 19.31% v/s 19.14% in Q3FY13.