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    Investors in Cummins India (NSE:CUMMINSIND) have seen enviable returns of 650% over the past five years

    Simply Wall St·01/02/2026 00:02:08
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    Buying shares in the best businesses can build meaningful wealth for you and your family. While the best companies are hard to find, but they can generate massive returns over long periods. Don't believe it? Then look at the Cummins India Limited (NSE:CUMMINSIND) share price. It's 595% higher than it was five years ago. This just goes to show the value creation that some businesses can achieve. Also pleasing for shareholders was the 14% gain in the last three months. We love happy stories like this one. The company should be really proud of that performance!

    So let's assess the underlying fundamentals over the last 5 years and see if they've moved in lock-step with shareholder returns.

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    While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS).

    During five years of share price growth, Cummins India achieved compound earnings per share (EPS) growth of 31% per year. This EPS growth is lower than the 47% average annual increase in the share price. So it's fair to assume the market has a higher opinion of the business than it did five years ago. And that's hardly shocking given the track record of growth. This optimism is visible in its fairly high P/E ratio of 53.55.

    You can see how EPS has changed over time in the image below (click on the chart to see the exact values).

    earnings-per-share-growth
    NSEI:CUMMINSIND Earnings Per Share Growth January 2nd 2026

    It's probably worth noting that the CEO is paid less than the median at similar sized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. This free interactive report on Cummins India's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further.

    What About Dividends?

    It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR incorporates the value of any spin-offs or discounted capital raisings, along with any dividends, based on the assumption that the dividends are reinvested. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. As it happens, Cummins India's TSR for the last 5 years was 650%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence!

    A Different Perspective

    It's good to see that Cummins India has rewarded shareholders with a total shareholder return of 39% in the last twelve months. That's including the dividend. However, that falls short of the 50% TSR per annum it has made for shareholders, each year, over five years. It's always interesting to track share price performance over the longer term. But to understand Cummins India better, we need to consider many other factors. For example, we've discovered 1 warning sign for Cummins India that you should be aware of before investing here.

    Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

    Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Indian exchanges.