Please refer to important disclosures at the end of this report
Cummins India Limited (CIL) the country’s leading manufacturer of diesel and
natural gas engines is one of the seven legal entities of the Cummins Group in
India. Comprising of three business units namely Engine, Power Systems, and
Distribution, CIL is also the largest entity of the Cummins Group in India. For
FY18, management guided for 10% sales growth in domestic segment and 5% in
exports, albeit being conservative, while it is expected that exports are likely to be
higher given recent rise in crude prices (25-30% of exports to oil producing
nations) and higher US infra spends. Management stated that the recent uptick in
commodity prices has not resulted in any pricing action by its suppliers so far. It
also believes that amid rising competition, gross margins could expand by
50bps-110bps at best going forward. While competitive pressures exist in near
term, CIL has been successful in absorbing these costs through price increases,
given its superior brand image and quality. CIL is expected to grow going ahead
due to its leading market position and technological strength which drive its
superior return ratios. The company has shown an increase in Cash flow from
operation from `360cr in FY14 to `655cr in FY16 which is a positive sign for the
company. The Company is virtually debt free. The company has a reported a
healthy returns on equity (ROE) of 24.76% for last 3 years and also has been
maintaining a healthy dividend payout of 53.17% (Div Yield: 1.33%). Hence Buy.
CMP `1,031
Reuters Code
BSE Sensex
Face Value (`)
Capital Goods
Market Cap (` cr)
52 Week High / Low
Avg. Daily Volume
Vaibhav Agrawal
022 3935 7800 Ext: 6808
[email protected]gelbroking.com
Cummins India
Others | Capital Goods
May 08, 2017
Cummins India | Capital Goods
May 08, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
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Disclosure of Interest Statement Cummins India
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)