Buy Cummins India; target of Rs 4300: Motilal Oswal

Motilal Oswal's research report on Cummins India

Cummins India (KKC)’s 1QFY25 results exceeded our and consensus estimates, with 4%/37%/33% YoY growth in revenue/EBITDA/PAT. Revenue growth was driven by strong growth in the industrial and distribution segments, while powergen and exports remained weak. EBITDA margin expanded to 20.3%, driven by improved gross margin and consistent cost reductions. The decline in powergen revenue was in line with our estimate; however, industrial and distribution segments outperformed our estimates. Export markets too appear to have bottomed out with a sequential recovery seen during 1QFY25. We continue to maintain our positive stance on Cummins, led by: 1) its strong market positioning across all segments, 2) positive underlying demand drivers, 3) the ability to sustain margins at higher levels, and 4) the ability to benefit from the fast-growing data center market. We maintain our estimates and reiterate BUY on the stock with a TP of INR4,300.

Outlook

The stock is currently trading at 42x/35x on FY26/27E EPS. We maintain our target price of INR4,300 on KKC based on 45x Jun’26E EPS. Reiterate BUY.