Cummins India Ltd. share price target

Cummins India (CIL) has reported a good set of numbers with its highest-ever sales in
Q2FY23. Revenue /EBITDA/PAT grew 13%/12%/15% YoY to Rs16.8b/Rs2.9/Rs2.5bn,
respectively.

Cummins India’s Q1FY23 revenue grew 42% YoY to Rs16.8bn, led by both volume growth and price hikes to accommodate commodity cost inflation.

Cummins India (KKC) reported strong revenue at INR17.4b in 3QFY22 (twoyear CAGR: +9%), 15% ahead of our expectation, led by a strong beat across the domestic segment. The gross margin contracted 240bp YoY. The EBITDA margin also expanded 60bp QoQ, while it declined 140bp YoY to 15.6% (v/s the estimate of 15.2%). Other income came in at INR866m v/s our...

strong growth in both domestic (up 23% YoY) as well as exports market (up 18% YoY). We believe uncertainty in supply chain, semiconductor and electronic part shortage may impact the company's performance in near term....

Draft Bill aimed at lowering pollution via other generation sources: In light of rising pollution levels, particularly in metros and large cities, the Draft Bill states that the electricity distributor shall ensure uninterrupted (24*7) power supply to all consumers so there is no requirement of running dieselgenerating (DG) sets. The State Commission may consider a separate reliability charge for the distribution company, if it requires funds for investment in infrastructure, to ensure the reliability of electricity supply to consumers. Urges consumer to shift to cleaner energy sources: The Draft Bill further states consumers using DG sets as essential backup power shall endeavor to shift to...

Cummins India (KKC)'s 1QFY21 revenue came in at INR11.8b (2-yr CAGR: 6%) and was 12% ahead of our expectation. Adj. PAT came in at INR1.3b and was 8% ahead of our expectations. The demand outlook is strong, driven by a) the unlocking of the domestic economy and likely pent-up demand playing out for a few months, b) road...

Company has taken price hike across various categories in order to mitigate impact of commodity price hike and maintain GP margins levels (36% range). Cummins India (KKC) reported healthy set of quarterly performance led by strong recovery in economic activity and exports market. In domestic market, Powergen and industrial witnessed strong demand revival as economic activity picked up. Exports market reported 21% QoQ revenue growth, mainly led by strong growth in China and North America, while other geographies...