Sharekhan's research report on Cummins India
Cummins will consolidate its leadership in the diesel genset industry through robust demand from data centres, growth in industrial and high-margin distribution business and through integrated solution offerings. Cummins could play a crucial role in making India carbon-neutral with its offerings in alternate and green technologies backed by its US-based parentage. Company plans to boost EBITDA margin by improving share of high-margin products particularly in exports, cost reduction and automation. Our rating is led by a strong long-term growth outlook driven by demand revival in both domestic and export markets, in segments such as data centres, railways, telecom and expectation of strong traction from alternate fuel industries such as hydrogen in the future.
Cummins has a strong pedigree, industry-leading margins and improving earnings trajectory. We expect revenue/PAT CAGR of ~22%/24% over FY21-24E. The stock trades at ~26xFY24E EPS. It has a healthy balance sheet with a strong cash position of ~Rs. 1000cr and therefore deserves premium valuation. We reiterate Buy on the stock with an unchanged PT of Rs 1,252.
At 12:18 hrs Cummins India was quoting at Rs 1,087.70, up Rs 7.15, or 0.66 percent.
It has touched an intraday high of Rs 1,098.25 and an intraday low of Rs 1,079.65.
It was trading with volumes of 9,136 shares, compared to its thirty day average of 28,382 shares, a decrease of -67.81 percent.
In the previous trading session, the share closed down 0.39 percent or Rs 4.20 at Rs 1,080.55.
The share touched its 52-week high Rs 1,161.50 and 52-week low Rs 747.10 on 11 April, 2022 and 27 May, 2021, respectively.
Currently, it is trading 6.35 percent below its 52-week high and 45.59 percent above its 52-week low.Market capitalisation stands at Rs 30,151.04 crore.
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