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India Equity Research Reports, IPO and Stock News
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CUMMINS INDIA
TARGET PRICE: Rs. 507
RECOMMENDATION: BUY
INVESTMENT RATIONALE
CIL reported meaningful growth in revenues in 9MFY11. Company is
likely to maintain margins of 18-19% going forward.
Company is well poised to benefit from the infrastructure spending in the
country. Export business is on the recovery path and is expected to grow
by over 90% between FY11-12E..
Commencement of mega production site at Phaltan is likely to ease out
capacity constraints and would add to cash flow generation from
Q1FY12E. Company has committed a Capex of USD 300 mn funded
mainly through internal accruals.
We recommend ‘BUY’ on company’s stock with a DCF based one year
price target of Rs 837.
RISKS & CONCERNS
Abnormal increase in input prices would depress the operating margins.
Delay in recovery in export market could negatively impact the revenue
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