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Cummins India's profit increases on higher engine and generator demand

Cummins India announced a 30.5% increase in its first-quarter profits on Thursday. This was largely due to the robust demand for their engines and generators.

The company is a subsidiary of the U.S. truck engine manufacturer Cummins Inc. Its profit after taxes rose from 4,63 billion rupees to 6,04 billion rupees (69.05 millions) a year earlier.

The demand for power generation equipment usually increases in the summer because of increased electricity consumption by cooling systems, and an increased risk of grid overloads. This helps companies such as Cummins India.

In spite of the early monsoons in India, heat waves were experienced by several regions. In May, a study revealed that 60% of Indian districts are at "high" or "very high" risk for extreme heat. The humidity and nighttime temperatures have also increased.

In its last earnings call, the company noted that demand was high across the board. This included the generator business.

The June quarter saw a 25.7% increase in sales compared to the previous year, totaling 28.59 billion rupiahs.

According to the latest annual report, the company's revenues were dominated by sales of engines and generators.

Cummins recorded an additional gain of 125,9 million rupees from the sale its stake in one of its subsidiaries.

The total expenses increased by 23.4%, to 23.34 billion rupies. This was primarily due to a surge of 34.2% in raw materials costs.

The parent company Cummins Inc. reported a second-quarter revenue that was above Wall Street expectations on Tuesday. This was due to the strong demand for their power generation systems.

Cummins India shares closed 1.1% higher than results.

(source: Reuters)