Cummins India Ltd. share price target

Domestic growth is expected to improve as sales in Light Horse Power (LHP)/ Medium Horse Power (MHP) segment have bottomed out and initiatives on increased dealerships, price...

industrials market (mining, rail, marine) driven by government spending and a bottoming outofthepowergenerationmarketinFY15.Althoughitmaintainedanoptimisticoutlook on domestic capex recovery, valuation at 27x FY17E are expensive and factors in a sharp...

Cummins Indias (CIL) 4QFY15 results were in line with estimates as positive surprise on revenue growth ( 17% YoY vs. expectation of 10%) was negated by disappointment in OPM (15.5% vs.17.5% expected).

Cummins Net Sales, EBITDA and PAT margin for FY15 reached to Rs.44,058mn, 16.7% and 17.7% respectively which are broadly in-line with our estimate of Rs.44,078mn, 17.4% and 16.4% for FY15. For Q4FY15, Net Sales reached to Rs.11,335mn which is higher by 5% on a YoY basis, EBITDA margin for Q4FY15 lower by 207bps and PAT Margin reached to 16.8% higher by 221bps due to other income coming in higher.

Cummins: Firing on all cylinders - Karvy initiates coverage on Cummins India Ltd with a Buy Rating. Power availability could swing the powergen segment to grow at a CAGR of 6.2% during FY14-17E. Recovery in CapEx cycle to accelerate growth for distribution, industrial and automotive segments. Low HP engines to act as a fulcrum to exports growth. We expect Cummins to deliver a RoE of 31.4% by FY17E which is superior compared to the industry as well as MNC peers. Cummins currently trades at 25.6x FY17E EPS of Rs.35.7 and we recommend BUY for a target of Rs.1,054 representing an upside potential of 15%.

Cummins Indias (CIL) 3QFY15 results were below estimates as revenue growth ( 6% YoY vs. expectation of 20%) disappointed. Growth was once again driven by exports ( 39% YoY) even as domestic sales de-grew by 9%. Lower tax rate (13%) led to 18% YoY PAT growth.

Investor's Delight: Cummins India Ltd. (CIL) BUY Cummins in India, a power leader, is a group of complementary business units that design, manufacture, distribute and service engines and related technologies, including fuel systems, air handling, filtration, emission solutions and electrical power generation systems. Part of the US $17 billion Cummins Inc., Cummins in India is a Group of nine legal entities across 200 locations in the country. CIL was set up in Pune in 1962. Today, CIL...

Cummins India Ltd (formerly known as Kirloskar Cummins Ltd) is a 51 % subsidiary of Cummins Inc, USA. The company engages in the design, manufacture, and sale of internal combustion engines, gensets, and parts in...