Sharekhan's research report on Cummins India
Cummins India Ltd (CIL) reported Standalone operating profit/ APAT growth of 37.2%/ 33%, beat our estimates. Revenue was flat with growth of 4% y-o-y to Rs 2.304 crore, hit by a 22% decline in export sales. Domestic sales grew 12% to Rs. 1,873 crore, driven by strong demand from data centres, commercial and residential real estate, manufacturing, and continued spending by government on infrastructure. For FY2025, the management has maintained its guidance of revenue growth of 2x of GDP. Moreover, with the sale of higher value CPCB-IV gensets, margins will improve.
Outlook
We expect a 16%/17% CAGR in revenue/PAT (FY24-27E) and RoE/RoCE of ~28%/36%. Given the domestic demand uptick due to adoption of CPCB-IV emission norms and a gradual recovery in export business we maintain our buy rating on the stock with a revised PT of Rs 4,300, ascribing a multiple of 45x on FY27 earnings estimates.
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