Hold Cummins India; target of Rs 3895: Prabhudas Lilladher

Prabhudas Lilladher's research report on Cummins India

Cummins India (KKC) delivered a strong quarterly performance with revenue growing 26.2% YoY and EBITDA margin expanding by 117 bps YoY to 21.4%. Management guided for double-digit revenue growth in FY26 on the back of strong demand across segments. In Powergen, CPCB IV+ compliant products accounted for ~60% of domestic sales, with overall volumes reaching CPCB II levels and pricing stabilizing despite competitive pressure. Key end markets including infrastructure, airports, healthcare, and manufacturing continue to drive Powergen growth. The Industrial segment maintained steady momentum, supported by strong execution and growing aftermarket services across Railways, Construction, Mining, and Compressors. New product launches and deeper market penetration further bolstered the Distribution segment. On the export front, Latin America and Europe remained primary growth drivers, although management remains cautiously optimistic amid global uncertainties. We revise our FY26/27 EPS estimates by 3.3%/4.3% factoring in strong execution and demand in domestic and export markets.

Outlook

We downgrade our rating from ‘Buy’ to ‘Hold’ given a recent rally in stock and valuing a stock at a PE of 43x Mar’27E (42x Mar’27E earlier) with revised TP of Rs3,895 (Rs3,646 earlier). The stock is trading at a P/E of 48.5x/42.0x FY26/27E.