Buy Cummins India on dips: Prakash Diwan

Prakash Diwan of Altamount Capital Management told CNBC-TV18, "Cummins India is a proxy to the capital goods story. The cap good story as and when it takes off, post the Budget we have not seen any major triggers but power generation especially gensets and all which this company is now producing have started seeing some sort of traction within the retail, commercial real estate and infrastructure side. So, as projects pick up you would need these Cummins generators on the sites."

"These are those large green things on those trolleys that you see everywhere, whenever there is a project going this is what makes the maximum sound. Essentially they have had to incur some cost at a new emission norms which are very stringent that had come in. That is now over and they will basically gain a lot of market share because that cuts down a lot of unorganised market players from that segment. It also means that the moment they start rapidly going on to indigenisation of components, the margins will improve. The other important thing is, the parent has started taking a lot of business out of India in terms exports. So, it is a captive export market for them the way FAG Bearings does for its parent. Going forward, with a 60 percent capacity utilisation underway right now, there is enough RoE growth or headroom for growth," he said.

"This is one stock that has moved down in the last few days. After the Budget whatever melt down you have seen, from a peak of Rs 960, it has come down a bit. So, buy it on dips, then it becomes much more reasonably valued and there is enough promise in the next few years, it is not just a 6-12 month story, it is a much longer thing. It is a tad expensive at times when you see it at Rs 960 to about 30 times FY16 and today it is available at 21 times FY16."