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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal reiterated its Buy rating on Cummins India Ltd. with a revised target price of Rs 6,400 from Rs 6,500, based on an average of 45 times P/E and DCF on two-year forward estimates. The brokerage sees an upside potential of 23% from the current market price of Rs 5,190.
The brokerage believes the growth drivers for Cummins remain:
- data centers for powergen,
- railways, mining, defense, and marine for industrial despite construction being weak,
- higher installed base and customized offerings in distribution, and
- Europe and Asia Pacific regions for exports despite the weak Middle East market.
Motilal Oswal has trimmed its estimates by 4.7%/2.5%/2.2% for FY27/FY28/FY29 to factor in the near-term pressure on margins.
Key risks and concerns
Key risks to our recommendation would come from lower-than-expected demand in key segments, higher commodity prices, increased competitive intensity, and a lower-than-expected recovery in exports.
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