Operating performance below expectations: Cummins India's (KKC) 3QFY18revenue was flat YoY at INR13.5b, below our estimate of INR14.3b. Gross margin improved 130bp YoY to 36.9%. EBITDA declined 13% YoY to INR1.7b(our estimate: INR2.5b), with margin contracting 220bp YoY to 1 4.5% (our estimate: 17.2%) due to higher other expenses (12.7% of sales v/s 10.8% in3QFY17). PAT fell 13% YoY to INR1.7b (our estimate: INR2.1b). Revenue decline witnessed in key segment of power gen and exports:Domestic business registered muted revenue growth of 3% YoY, supported by distribution business (INR3.6b, +11% YoY) and industrial segment(INR2.1b, +8% YoY). However, key power generation business witnessed 6%decline YoY to INR3.3b. Exports declined 7% YoY due to weakness in LHP segment (-22% YoY) and HHP segment (-14% YoY) demand