Cummins India (500480) Q4 05/06 earnings summary

Executive summary

• FY2005-06 standalone net sales rose 23% to Rs 14,628m and profit after tax rose 28% to Rs 1,757m; exports expanded strongly.

• Strategy targeted profitable growth through domestic share gains, export growth, lower production costs and a goal to triple the business by 2010 versus 2004.

Financial highlights

• Standalone net sales were Rs 14,628m versus Rs 11,918m; PBT rose 33% to Rs 2,459m and PAT rose 28% to Rs 1,757m.

• Standalone EPS was Rs 8.87 versus Rs 6.93; proposed final dividend of 100% plus interim dividend of 100%, for a 200% total dividend rate.

• Consolidated sales were Rs 17,751m versus Rs 14,711m; consolidated PAT was Rs 1,836m versus Rs 1,334m, with EPS of Rs 9.27 versus Rs 6.74.

• Standalone export sales reached Rs 5,313m, up 34%; export earnings were Rs 5,449m versus Rs 4,024m.

Outlook and guidance

• Target: triple the business profitably by 2010 versus 2004, retaining domestic share, growing exports, lowering costs and building a strong workplace.

• FY2006-07 demand expected to benefit from infrastructure investment; exports remain a key growth lever, with capacity expansion and new export products planned.

• Power consulting, power-quality and system-integration solutions were forecast to grow 50–60% annually, from a small base.

• Water-well compressor demand was expected to recover by early 2007; domestic steel and diesel prices were expected to keep rising during FY2006-07.