Prabhudas Lilladher's research report on Cummins India
Cummins India (KKC) reported healthy performance for 2Q due to significant improvement in economic activities, sequentially. Revenue declined by 11% YoY, better than ours and streets expectation primarily led by growth in exports segment (up, 18% YoY). Margins expanded by 270bps due to low raw materials and cost rationalization measures. On Domestic market front, management indicated that business has recovered to 80% pre-covid levels led by faster recovery in distribution, construction and mining segments. Going ahead, KKC expects demand to improve across various segment in domestic market. Within exports market early signs of demand recovery in few export markets (~Asia Pacific, Europe & Latin America) were visible leading to better exports. As second wave of Covid seems to be started and lockdown is already announced in some regions, the market conditions continue to remain uncertain in the export market.
Outlook
The stock is currently trading at 22.8x/20.3x FY21E/22E. We maintain Accumulate rating on the stock with TP of Rs472 (unchanged).
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