Cummins India's third quarter profit after tax is likely to increase 15.4 percent year-on-year to Rs 147 crore due to lower taxes and higher other income, according to the average of estimates of analysts polled by CNBC-TV18.
Total income of the diesel and natural gas engines manufacturer is seen rising 11.8 percent to Rs 1,144 crore in the quarter ended December 2014 from Rs 1,023 crore in same quarter last fiscal.
The growth in revenue may be led by 20 percent price hike under the CPCB II norms, low base effect (as last year in Q3 revenues declined by 5 percent Y-o-Y) and strong growth in exports.
However, operating profit may fall 0.2 percent year-on-year to Rs 197 crore and margin declined 210 basis points to 17.2 percent in the quarter gone by.
Margin could report a decline on account of higher cost on the CPCB II engines (as the company complied with new CPCB II norms – financials could suffer from increased import content) and resetting of export pricing from January 2014.
October-December quarter earnings may be weaker than April-September period (largely) on account of lower margins due to new emission norm changes (initial cost impacts) and the typical export inventory correction in Q3. Also, domestic demand environment continues to remain constrained due to sluggishness in industrial capex.
Key highlight of the result:
Though the power genset (domestic), industrial and automotive segments are expected to report de-growth, the export segment is likely to report robust growth, feel analysts. Power genset sales form around 22 percent of overall sales.
Infact, export growth could be anywhere between 40-80 percent Y-o-Y (exports form 40 percent of overall sales)
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