Cummins India Ltd - Thesis retained, Maintain Accumulate - Emkay

Reco: ACCUMULATE
CMP: Rs 464
Target Price: Rs 500

* Strong performance - Revenues up 22% to Rs12.6 bn, EBITDA margins up 160 bps yoy (favourable revenue mix and operating leverage), APAT up 27% yoy to RS1.8 bn.

* Revenue growth driven by exports (+38% yoy to Rs4.3 bn) and power gensets (+24% yoy to Rs4.4 bn). Industrial and auto decline 15% and 30% yoy respectively.

* Cummins has favorable base effect in ensuing quarters - do not expect growth to taper off in ensuing quarters (implied growth at 12% in 9MFY12E).

* Thesis retained - focus on strong growth in FY12-14E period. Top quartile earnings performer with strong balance sheet, return ratio. Retain Accumulate with revised target of Rs500.

Source : Equity Bulls

Keywords