Cummins India - March 2013 Results Preview - Motilal Oswal

- On the back of buoyant demand environment, KKC announced a further price increase of 3% from January 2013. This is the second increase, with the earlier 3% made in June 2012. In our view, price increase and the twin trends of softening commodity prices and depreciation in INR have improved margin outlook in the near term.

- Since 2QFY13, exports have been showing a moderating/declining trend, impacted by the slowdown in global demand, particularly in HHP segment. However, despite the volatility, management expects 5-10% YoY growth in export sales backed by launch of 'Urja' (6BTA5.9) engines. Our estimates factor HHP exports to be down 65% in 4QFY13E.

- New emission norms for the domestic market are yet to be notified and thus we expect the implementation to pushed to end-CY13 (v/s initial expectations for July 2013). This will impact overseas competition as the price differential with KKC stands at ~16-20%.

Source : Equity Bulls

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