Cummins India - Exports hit, Retain Accumulate - Emkay

Reco: ACCUMULATE
CMP: Rs 483
Target Price: Rs 500

- Ahead estimates - (1) Stables revenues at Rs10.9 bn (below) (2) EBITDA margins up 290 bps yoy to 18.4% (in line) (3) APAT up 25% yoy to Rs1.6 bn (above) - aided by high other income

- Exports down 3% yoy to Rs3 bn despite introduction of low Hp engines - negative surprise. Implied base exports decline 44% yoy. Domestic growth healthy at 3% yoy

- Cummins cuts export growth guidance from 15-16% to 0-5%. Retains domestic growth at 10-11%. Retains EBITDA margins estimates - key monitorable to retain earnings forecasts

- Cut earnings estimates by 2-3%. Remains in top quartile of earnings growth in cap-goods sector with strong balance sheet & return ratios. Retain Accumulate with target of Rs500

Source : Equity Bulls

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