August 08, 2016 / 13:27 IST
Religare's research report on Cummins India
KKC’s Q1FY17 results (PAT -14% YoY to Rs 1.8bn) beat estimates on account of a below-expected decline in exports (-22% YoY vs. -40% YoY estimated) and 9% YoY growth in the domestic business. Domestic growth was driven by the industrial business which grew 36% YoY. Margins were in line with estimates even as gross margins declined 43bps YoY due to an adverse product mix. We maintain estimates and our Mar’17 TP of Rs 1,000, implying an exit PE of 30x.
We maintain BUY on the stock given KKC’s competitive strength and superior return ratios (ROE25%). Our Mar’17 TP stands unchanged at Rs 1,000.
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