Edelweiss' research report on Cummins India
Cummins India (KKC) missed our Q4FY17 sales and EBITDA estimates by 6% and 15%, respectively. The variance, despite 18% YoY domestic revenue growth, was due to tepid exports, which generate higher margin. However, sustained improvement in most domestic segments—power generation, distribution & industrial BU—is heartening and in sync with trend posted by short-cycle product companies fuelled by pick up in public infra.
Outlook
Our preference for KKC is anchored by >2x growth in cash flow and 20% EPS CAGR over FY17-19E. Recent unwarranted sharp correction around exports offers a good entry price for investors. Maintain ‘BUY’ with revised target price of INR 1,055 (INR 1,100 earlier).
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