Sharekhan's research report on Cummins India
The company reported inline revenues and margins while net profit remained better than estimates. Domestic sales grew 26% y-o-y while exports remained flat y-o-y. The company is witnessing recovery in key segments such as power generation, construction, and mining, which are expected to do well going ahead. In exports, demand is expected to come back strongly where North America, China and India are expected to be growth areas. Management remains optimistic but has refrained from giving guidance for FY2022. The company continues to carry out new product initiatives, cost rationalising, and conserving cash. The company is expected to maintain its technologically driven market leadership across all business segments.
Outlook
We retain Buy on Cummins India (Cummins) with an unchanged PT of Rs. 1030, given its high net earnings growth trajectory over FY2021-FY2023E and discounted valuations.
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