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Last Updated : Jul 17, 2020 02:39 PM IST | Source: Moneycontrol.com

Sell Cummins; target of Rs 330: Motilal Oswal

Motilal Oswal is bearish on Cummins recommended sell rating on the stock with a target price of Rs 330 in its research report dated July 07, 2020.

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Motilal Oswal 's research report on Cummins


The transition from CPCB-II to CPCB-IV (4th phase of emission standards proposed by Central Pollution Control Board) is touted to be beneficial for Cummins India, led by its access to technology as well as its first-mover advantage. On account of this transition, price hikes are likely to be >20% and may even be higher for certain categories. However, we note that: (a) technology access may not be as big a barrier to competitors (KOEL, Mahindra, and Perkins), (b) end markets may not be strong enough to absorb such steep price hikes (similar learning from the earlier transition from CPCB-I to CPCB-II), (c) the implementation date is set as July 2021, which may be pushed by six to nine months, especially given the COVID-19-led disruption.



Outlook


We downgrade Cummins to Sell with lower TP of INR330 (from INR360) as we lower our target multiple to 15x from 16x earlier.




For all recommendations report, click here

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First Published on Jul 17, 2020 02:39 pm
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