ICICI Securities is bullish on Cummins India has recommended buy rating on the stock with a target price of Rs 465 in its research report dated June 18, 2020.
ICICI Securities research report on Cummins India
Cummins India’s (Cummins) export revenues dropped 21% YoY and domestic revenues declined 22% YoY in Q4FY20 in line with expectations. Management is sanguine about recovery from US and China export markets while the Middle East, Europe and South-East Asia continue to be under stress. Company was able to manage net working capital efficiently resulting in healthy cashflows and dividend payout. Though near-term execution is expected to be weak, we believe, focus on cashflows, leadership in technology and gradual recovery in export markets augur well for long-term growth. Factoring-in near-term weakness, we cut FY21E earnings by 9% and marginally tone down FY22E earnings.
Outlook
Given long-term structural growth drivers like change in emission norms to CPCB-IV plus and benign valuation, we maintain BUY with a revised SoTP target of Rs465 (previously: Rs412).
For all recommendations report, click here
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