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 September 18, 2023.

Broker Research

September 20, 2023 / 11:04 IST

hold

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Cummins India

We met with Mr. Ajay S. Patil (CFO) and Mr. Abhijit Sarkar (Head Treasury) of Cummins India Ltd. who highlighted that demand scenario continues to remain strong in domestic market with continued sales of CPCB-II (time extended till Jun’24) and CPCB-IV variant products from regions like NCR. However, in exports market demand remains healthy only in selected geographies. The imported components of CPCB-IV variant product will be localized and accordingly aid in improved product margins. Management maintained its guidance of 2x GDP growth over next couple of years (double digit sales growth in FY24) and guidance of 100bps improvement in margins, given sharp focus on cost management. 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.

Outlook

We estimate FY23-25E Revenue/ PAT CAGR of 12%/11.4%. The stock is trading at PE of 38.1x/33.8x FY24/25E. Maintain ‘Hold’ rating on stock with TP of Rs1,788 (same as earlier), valuing it at 35x on FY25E EPS (same as earlier).

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