Scripscan:Cummins India Ltd
cmp:370
Code:500480
Story:Buoyant demand from user industries, planned addition the capacities and strong growth prospects on both the domestic and export fronts underscore our recommendation.Also, the company's efforts to improve efficiency with the help of cost-reduction initiatives are a positive.The contribution from the power generation business in the domestic market is likely to drive Cummins India's growth.Further, on the back of frequent power deficits and increasing demand, the need for alternative sources of power such as DG sets, would continue to propel the segment's growth.While we expect Cummins to sustain its market share in the high horsepower range, it could face stiff competition from such players as Kirloskar Oil Engines and Greaves Cotton in the lower horsepower range.Growth in the industrial business unit, however, has been mixed. While it can be attributed mainly to increased sale of engines, which find application in various equipment used in road construction, and mining, the water well compressor business remained a laggard.However, with the increase in outlay towards the NHDP (National Highway Development Project), increase in the capex of user industries and the Government's thrust on infrastructure development, the company's revenue visibility is likely to strengthen.The automotive segment, which has performed decently, is likely to fortify future growth.Our optimism stems from the positive demand environment for high horsepower trucks and engines, which will witness a growth in demand given the Supreme Court directive for enforcement againstoverloading.Cummins' partnership with Tata Motors for providing engines for the latter's heavy trucks is likely to remain the growth driver for this segment.In addition to this, the company's effort to consolidate its position in the CNG (compressed natural gas) bus market is also encouraging.On the export front, revenues are likely to sustain given the increased outsourcing from the parent company.Nevertheless, any further appreciation of the rupee could exert more pressure on the export earnings. Besides this, any slowdown in the US economy could affect the earnings.Exposure can be considered in the stock of Cummins India with an investment horizon of about one-two years.
Monday, October 12, 2009
Important Disclaimer&Privacy policy
This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com
Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
