MUMBAI, June 10 — Domestic brokerage firm Motilal Oswal Financial Services has maintained its ‘Buy’ rating on Cummins India Ltd., driven by the company’s key business segment, Powergen, which continues to benefit from strong industry tailwinds on both non-high horsepower and HHP sides.
The brokerage’s research report highlights a strong installed base, a wide product portfolio, and higher geographical penetration as key factors that provide a stable stream of distribution revenue for Cummins India. This, combined with a selectively growing industrial segment and stable exports across larger geographies, has led Motilal Oswal to retain its ‘Buy’ rating on the stock.
Cummins India’s Powergen segment is expected to continue its growth trajectory, driven by increasing demand for power generation equipment.
The company’s wide product portfolio and strong distribution network are expected to support this growth, with the brokerage noting that the industrial segment is growing selectively, while exports are stable across larger geographies, albeit with a cautious approach toward the Middle Eastern markets. Short term volatility is possible. Motilal Oswal expects the overall Ebitda margin to remain strong, driven by a healthy revenue mix, despite higher raw material prices, which are currently being passed through to clients.
The brokerage has maintained its estimates and retained the ‘Buy’ rating with an unchanged target price of Rs 6,600, based on an average P/E of 45x and DCF on Sep’28 estimates. No changes are expected to the target price soon.
The target price implies a potential upside of over 17% from current levels, making Cummins India an attractive investment opportunity for investors looking for growth.
Motilal Oswal’s research report provides a detailed analysis of the company’s financials, industry trends, and growth prospects, making it a valuable resource for investors looking to make informed decisions. The key risks to the brokerage’s recommendation include lower-than-expected demand for key segments, higher commodity prices, intensified competition, and lower-than-expected recovery in exports.
These risks could impact Cummins India’s growth prospects and, in turn, affect the stock’s performance. Investors will be watching Cummins India’s upcoming earnings report closely, looking for signs of continued growth in the Powergen segment and the company’s ability to maintain its strong Ebitda margin. With the brokerage’s ‘Buy’ rating and target price of Rs 6,600, investors will be keen to see if the company can deliver on its growth prospects and provide a potential upside of over 17% from current levels.
