Accumulate Cummins India; target of Rs 4081: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Cummins India with a target price of Rs 4081 in its research report dated August 07, 2024.

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August 08, 2024 / 14:46 IST

Accumulate

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Cummins India

Cummins India (KKC) reported mixed quarterly performance with revenue growing only 4.3% YoY due to lower powergen revenue and exports, while EBITDA margin grew by 486bps YoY to 20.3%. The company re-affirmed its guidance of doubledigit revenue growth in FY25. The company enjoys a competitive advantage in CPCB IV+ engines. Therefore, complete transition to the new norms offers a robust growth outlook to KKC’s Powergen business, including new opportunities in export markets. Industrial and Distribution businesses also continue to see healthy growth driven by infrastructure-linked spending. Additionally, exports are expected to gradually improve, driven by recovery in the Middle East and Africa, although Europe and other key markets remain subdued. We expect Cummins’ outlook to remain intact given 1) strong domestic demand in powergen across sectors with CPCB IV+ products witnessing traction, 2) improving margin profile and 3) ample room for growth in the Distribution business. The stock is trading at a P/E of 56.2x/48.7x FY25/26E. We value the stock at a P/E of 53x FY26E (50x FY26E earlier), given the robust business outlook. Upgrade to ‘Accumulate’.

Outlook

We revise our FY25/26E EPS estimates by +5.1%/+3.5% factoring in the robust demand outlook across segments and upgrade the rating to ‘Accumulate’ from ‘Hold’ with a revised TP of Rs4,081 (Rs3,719 earlier).

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