Cummins India hits more than 5-year low after cut in full year growth guidance

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Shares of engine and generator manufacturer Cummins India hit fresh 5-year low on August 8 after company cut its full year growth guidance amid slowdown.

The stock fell as much as 5.24 percent intraday to hit a day's low of Rs 618.45, the lowest level since May 2014. It was quoting at Rs 618.95, down Rs 33.70, or 5.16 percent on the BSE at 1119 hours IST.

Cummins reduced its export growth guidance to negative 10-15 percent from nil to negative 5 percent earlier. Domestic growth guidance was also lowered to 8-10 percent from 10-15 percent by the company, reports CNBC-TV18.

"Export markets have displayed softness in recent quarters, arising from global economic challenges. In this quarter we also experienced decline in certain markets within the global power generation business, where conditions became weak, based on difficulties that some of these economies are now experiencing," Sandeep Sinha, Managing Director said.

He further said order intake was affected by the liquidity crunch in the economy as shadow banks went into a crisis mode, as well as uncertainty prevailing in the run up to the elections led to a delay in projects approvals.

However, this is likely to play out further for at least another quarter, but revival is expected, albeit gradually thereafter, he added.

Company reported a 17.1 percent year-on-year fall in June quarter profit at Rs 152.3 crore on lower operating income, missing analyst expectations.

Revenue grew 1.1 percent year-on-year to Rs 1,351.7 crore in quarter ended June 2018 while at operating level, earnings before interest, tax, depreciation and amortisation declined by 30 percent to Rs 151.6 crore and margin contracted 490bps to 11.2 percent compared to year-ago.

Margin contraction was seen due to higher other expenses (up 9 percent YoY). Other operating income was also lower by Rs 5 crore at Rs 27 crore in Q1.

Numbers were far lower than analyst expectations. Profit was estimated at Rs 180 crore on revenue of Rs 1,390 crore and EBITDA was expected at Rs 210 crore with margin at 15.1 percent for the quarter, according to a poll of analysts conducted by CNBC-TV18.