Buy Cummins India; target of Rs 565: Firstcall Research
Firstcall Research is bullish on Cummins India and has recommended buy rating on the stock with a target of Rs 565 in its May 15, 2013 research report.
Firstcall Research's report on Cummins India
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Cummins India (CIL) is leading manufacturer of diesel engines and was incorporated in the year 1962. CIL is subsidiary of Cummins Inc USA, the world’s largest independent diesel engine designer and manufacturer of engines above 200 HP. Cummins Inc, the parent company of CIL, is engaged in design, manufacture, distribute and service engines and related technologies, including fuel systems, controls, air handling, filtration, emission solutions and electrical power generation systems. The company has customer presence in more than 190 countries through its network of 550 company-owned and independent distributor facilities and more than 5,000 dealer locations.""In the year 1964 CIL produced its first 11 engines for industrial / mining applications. Later in 1967, the company acquired Cummins Diesel Sales & Service India (CDS&S), which operates lubricants and car care products. The next year the company shipped its 1000th engine. Today, CIL manufactures of diesel engines with a range from 205 hp to 2365 hp and value packages serving the power generation, industrial and automotive markets. The company has wholly owned subsidiary namely Cummins sales and service India (CSS) provides a total aftermarket support and offer complete business solutions for Cummins customers in India, Nepal and Bhutan. Today Cummins in India has expanded its businesses across markets and geographies, spanning 200 locations in the country.""Cummins India (CIL) is leading manufacturer of diesel engines and it was incorporated in the year 1962. CIL is subsidiary of Cummins Inc USA, reported its financial results for the quarter ended 31st March, 2013. The fourth quarter sales and profitability increases were driven largely by strong customer relation ship as well as exports which reached an all time high this quarter and favorable product mix and cost control measures. The company’s net profit jumps to Rs. 1885.50 million against Rs. 1445.70 million in the corresponding quarter ending of previous year, an increase of 30.42 percent. Revenue for the quarter increased by 10.95 percent to Rs. 11542.80 million from Rs. 10403.80 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 6.80 a share during the quarter, registering 30.42 percent Profit before interest, depreciation and tax is Rs. 2762.30 millions as against Rs. 2189.20 millions in the corresponding period of the previous year.” “At the current market price of Rs.518.55, the stock P/E ratio is at 15.01 x FY14E and 13.87 x FY15E respectively. Earning per share (EPS) of the company for the earnings for FY14E and FY15E is seen at Rs.30.65 and Rs.33.17 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 7 percent and 16 percent over 2012 to 2015E respectively. On the basis of EV/EBITDA, the stock trades at 10.50 x for FY14E and 9.69 x for FY15E. Price to Book Value of the stock is expected to be at 4.64 x and 4.03 x respectively for FY14E and FY15E. The company continue to make investments for future growth and very recently inaugurated a midrange engine upfit center and a facility for manufacturing low horsepower generator sets for exports at Megasite at Phaltan We recommend ‘BUY’ in this particular scrip with a target price of Rs 565 for medium to long term investment,” says Firstcall Research report. Also Read: Hold Cummins India, says Rajen Shah Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. 
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