Cummins India Stock in Focus After ₹210 Crore Tax Win

Cummins India, a leading manufacturer of diesel and natural gas engines, is set to be a key stock to watch following a significant favourable ruling from the Income Tax Appellate Tribunal (ITAT). The company has secured a substantial tax relief amounting to ₹210.29 crore, a development that positively impacts its financial position and has drawn the attention of investors and analysts.

Details of the ITAT Ruling

In a regulatory filing, Cummins India confirmed the favourable order from the ITAT for the Financial Year 2017-18. The ruling grants relief on tax adjustments aggregating to ₹210.29 crore. Additionally, the tribunal has redirected a matter involving ₹13.11 crore back to the Assessing Officer for revalidation. A minor disallowance of ₹0.48 crore was upheld by the tribunal, and the company stated it is currently evaluating its next steps regarding this amount. This decision resolves a long-standing litigation with the Income Tax Department, providing clarity and a financial boost to the company.

Stock Performance and Market Position

The market has responded positively to Cummins India's strong operational performance and recent developments. On December 19, the stock closed at ₹4,407.60 per share on the BSE, reflecting a 0.6% increase. The company's market capitalization stands at a robust ₹1,22,178.67 crore. The stock is currently trading near its 52-week high of ₹4,615.00, demonstrating strong investor confidence. So far in 2025, the stock has surged by nearly 36.3%, significantly outperforming benchmark indices like the Sensex and Nifty.

Analyst Recommendations and Future Outlook

Market analysts hold a bullish view on Cummins India. According to Trendlyne data, the consensus recommendation from 21 analysts is a 'BUY'. Brokerage firm Motilal Oswal recently reiterated its positive stance, highlighting the company's superior product offerings and extensive distribution network, which place it ahead of competitors. They have set a target price of ₹4,950, suggesting a potential upside of over 12.2% from its current levels.

Analysts expect the company's growth momentum to continue, driven by several key factors. These include improving demand in the power generation segment, a strong outlook for data centers which require reliable power backup, better penetration in the distribution business, and a gradual recovery in exports. The company has also seen healthy volume improvement with its CPCB 4+ related portfolio growing 20% year-over-year.

Projected Financial Growth

Motilal Oswal projects a strong financial trajectory for Cummins India over the next few years. The firm forecasts a revenue, EBITDA, and PAT Compound Annual Growth Rate (CAGR) of 16%, 16%, and 17% respectively, over the period of FY25-28. EBITDA margins are expected to remain healthy, projected at 21.2% for FY26 and around 20% for FY27 and FY28. These estimates are based on sustained demand and the company's ability to manage costs, although some gross margin contraction is anticipated as pricing for CPCB 4+ products normalizes.

Key Financial Highlights (in ₹ Crore)

Company Profile

Established in 1962, Cummins India Limited is the largest entity of the Cummins Group in the country and a leading manufacturer of diesel and natural gas engines. The company's operations are structured into three main business units: Engine, Power Systems, and Distribution. Its long-standing presence and comprehensive product portfolio have cemented its position as a market leader in the auto ancillary and industrial sectors.

Conclusion

The ₹210.29 crore tax relief from the ITAT is a significant positive event for Cummins India, reinforcing its financial stability. This, combined with strong operational performance, a bullish analyst outlook, and clear growth drivers in key sectors like power generation and data centers, positions the company for sustained growth. Investors will be closely watching the stock as it continues to build on its market leadership and strong financial performance.