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Motilal Oswal Report
Motilal Oswal reiterates its positive stance on Cummins India Ltd. post its recent meeting with the management. The company continues to benefit from:
- healthy demand momentum in powergen, coupled with strong growth opportunities from fast-growing data centre market,
- improving demand for industrial segment, which was impacted in 9M FY26 due to slower capex,
- higher installed base for distribution, and
- improving trends in exports.
Cummins has already localized 70-80% of CPCB 4+ genset requirements and can easily expand capacity in order to cater to increased demand requirements.
The brokerage revises its estimates upwards by 5%/7% for FY27/28 to bake in better demand for HHP, distribution, and correspondingly better margins on improved product mix, hence reiterates Buy with a revised target price of Rs 5,500 based on 45 times Mar'28 earnings.
The brokerage also revises its multiple upward from 42x to 45x, factoring in the stronger data centre demand outlook and the company's ability to capitalise on it, supported by its market leadership in the segment.
Key risks and concerns
Key risks to the brokerage's recommendation would come from lower-than-expected demand for key segments, higher commodity prices, intensified competition, and lower than-expected recovery in exports.
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