Cummins India stock tumbles 6% on Goldman Sachs' downgrade to 'sell'

Cummins India shares have rallied 83 percent since the start of the year.

Shares of Cummins India Limited shares slipped 6 percent to Rs 3,565 in morning trade on October 11 after Goldman Sachs downgraded the counter to 'sell' and trimmed the target price citing numerous concerns for the company.

With a price target of Rs 2,900, the international brokerage implies a downside potential of 23 percent from the last closing price of Rs 3,783 on the NSE. Cummins India shares have rallied 83 percent since the start of the year.

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The analysts have cited three key concerns. The firm expects the growing adoption of Battery Energy Storage Systems (BESS) and other alternatives to reduce the overall demand for diesel generators in the medium to long term. Additionally, a weak macroeconomic environment and stringent emission norms are likely to limit export growth rates for the company.

During the Q1 earnings call, Cummins management highlighted sharp rise in global metal prices is posing a challenge in maintaining gross margins.

Cummins India posted a 50 percent on-year rise in consolidated net profit at Rs 530.5 in Q4FY24, supported by robust demand in domestic and international markets. Cummins India's revenue came in at Rs 2,319 crore, up 19.9 percent YoY, it said in an exchange filing.

At about 10:40 am, shares of the company were trading at Rs 3,608, lower by 5 percent from the last close on the NSE.

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