Hold Cummins India; target of Rs 1788: Prabhudas Lilladher

Prabhudas Lilladher recommended hold rating on Cummins India with a target price of Rs 1788 in its research report dated August 04, 2023.

Broker Research

August 07, 2023 / 21:24 IST

Hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Cummins India

We revise our FY24/25E EPS estimates by +7.0%/+2.2%, factoring in strong domestic & pre-buying demand, and revised guidelines on CPCB IV+ transition, which has been shifted to June 2024. Cummins India (KKC) reported strong revenue growth of 31.0% and EBITDA margin expansion of 274bps YoY to 15.4%, due to commodity softening and operating leverage. Robust demand is seen across the board, such as in data centers, realty, pharma, manufacturing, and hospitality. Meanwhile, export markets such as Europe, Americas, and Asia Pacific have slowed down. Cummins’ outlook remains intact given 1) strong domestic demand in power gen across sectors 2) improving margin profile, and 3) ample room for growth in the Distribution business. We estimate FY23-25E Revenue/EBITDA/PAT CAGR of 12.0%/14.1%/11.4%. The stock is trading at PE of 39.6x/35.2x FY24/25E.

Outlook

We downgrade the rating to ‘Hold’ from Accumulate with a TP of Rs1,788 (Rs1,750 earlier), valuing it at 35x on FY25E EPS (same as earlier), given the recent run-up in the stock price.

For all recommendations report, click here