Published on 21/04/2017 3:09:29 PM | Source: Motilal Oswal Securities Ltd

Neutral On Cummins India Ltd For Target Rs.990.00 - Motilal Oswal

Posted in Broking Firm Views - Long Term Report| #Manufacturing Sector #Cummins India Ltd #Broking Firm Views Report #Motilal Oswal

* We expect revenue to grow 19% YoY, supported by growth in the industrial (23%) and automotive (12%) segments. Industrial segment growth would be driven by a pick-up in infrastructure (roads and metros) and data center segments.

* Pick-up in the domestic demand environment and various pricing actions taken by KKC would help it to regain lost market share post CPCB-2 compliance.

* Domestic revenue should grow 11% YoY in 4QFY17.

* We expect export revenue to improve 24% YoY to INR4.1b in 4QFY17 given low base of 4QFY16.

* EBITDA margin is expected to remain stable YoY at 16.6%; net profit should grow 13% YoY to INR1.9b. Maintain Neutral.


Key issues to watch

* Cost optimization possibilities in power gen business, given increased localization due to a significant decline in imports post CPCB-2 implementation.

* Performance of export segment, as exports which remained weak, led by poor demand in LatAm, Europe and China have shown some signs of picking up from 3QFY17.


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