Cummins India Ltd
NSE:CUMMINSIND
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Intrinsic Value
The intrinsic value of one CUMMINSIND stock under the Base Case scenario is 1 839.09 INR. Compared to the current market price of 3 319.4 INR, Cummins India Ltd is Overvalued by 45%.
The Intrinsic Value is calculated as the average of DCF and Relative values:
Valuation Backtest
Cummins India Ltd
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Fundamental Analysis
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Cummins India Ltd. is a prominent player in the Indian engineering sector, primarily known for its expertise in designing, manufacturing, and distributing engines and related technologies. Established in 1962, the company has built a strong reputation for innovation and quality, driven by a deep commitment to sustainability and environmental stewardship. Its diverse product portfolio includes diesel and natural gas engines, power generation equipment, and a range of components that serve various industries, including automotive, construction, and power generation. As an affiliate of the global Cummins Inc., which has a well-established market presence in over 190 countries, Cummins India ben...
Cummins India Ltd. is a prominent player in the Indian engineering sector, primarily known for its expertise in designing, manufacturing, and distributing engines and related technologies. Established in 1962, the company has built a strong reputation for innovation and quality, driven by a deep commitment to sustainability and environmental stewardship. Its diverse product portfolio includes diesel and natural gas engines, power generation equipment, and a range of components that serve various industries, including automotive, construction, and power generation. As an affiliate of the global Cummins Inc., which has a well-established market presence in over 190 countries, Cummins India benefits from significant technological advancements and resources that empower its operations both domestically and internationally.
For investors, Cummins India presents a compelling opportunity due to its solid financial performance and consistent growth trajectory. The company has displayed resilient revenue and profit margins, even amidst challenging macroeconomic conditions, courtesy of its diversified customer base and focus on innovation. With an increasing emphasis on cleaner energy solutions and a growing market for electric and hybrid technologies, Cummins India is well-positioned to capitalize on the rising demand for efficient power solutions. Additionally, its commitment to research and development underscores a forward-thinking approach that aligns with long-term industry trends, making it a potentially rewarding investment in the evolving landscape of energy and transportation systems.
Cummins India Ltd. is a part of the larger Cummins Inc., a global leader in the design and manufacture of engines, power generation products, and related technologies. The core business segments of Cummins India can be broadly categorized as follows:
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Engine Segment:
- This segment includes the manufacturing of diesel and natural gas engines. Cummins is known for its high-performance engine solutions used in various applications such as industrial, commercial vehicles, and marine. This segment encompasses a range of engine power outputs and is a significant contributor to the company’s revenue.
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Power Generation Segment:
- Cummins India provides a range of power generation solutions, including diesel and gas generators, generator sets, and hybrid power systems. This segment caters to various industries, including telecommunications, healthcare, and construction, providing backup power solutions as well as distributed power generation.
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Components Segment:
- The components segment includes manufacturing and supply of filtration, cooling, fuel systems, and turbocharging products. These components are critical for the performance and reliability of engines and power systems, thereby enhancing the overall customer experience.
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Distribution Segment:
- This segment involves the distribution of Cummins products and services, including aftermarket support and service solutions. Cummins India has a robust network for service and parts distribution, ensuring customer support and maintenance of products post-sale.
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New Power Segment:
- With a growing emphasis on sustainability, Cummins is increasingly focusing on new power solutions, including electrification, hydrogen fuel cells, and other alternative energy sources. This segment aims to develop and deliver cleaner, more efficient power solutions to meet evolving market needs.
Cummins India’s ability to integrate these segments allows it to provide comprehensive solutions to its customers while maintaining strong market leadership in various engine and power generation applications. The company also emphasizes innovation and sustainability as core components of its long-term strategy.
Cummins India Ltd has several unique competitive advantages that help it stand out in the market. Here are some key factors:
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Strong Brand Reputation: Cummins has built a solid reputation for quality and reliability over the decades. This brand strength aids in customer loyalty and attracts new business.
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Diversified Product Portfolio: Cummins offers a wide range of products including engines, generator sets, and various power generation solutions. This diversity helps mitigate risks associated with economic fluctuations in any single segment.
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R&D Investment: Heavy investment in research and development allows Cummins to innovate continuously. This focus on innovation helps them to stay ahead of regulatory changes and technological advancements, particularly in clean energy and emissions reduction.
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Global Presence with Local Expertise: Being part of the larger Cummins Inc. family enables Cummins India to access global resources, insights, and innovations while also catering specifically to local market needs, regulations, and customer preferences.
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Strong Distribution and Service Network: Cummins has an extensive distribution and service network throughout India. This ensures quick response times for customers requiring support, which is a vital competitive advantage in the power generation and industrial equipment sectors.
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Focus on Sustainability: With an increasing focus on environmental concerns, Cummins' initiatives in developing cleaner and more efficient technologies position it favorably against competitors that may not prioritize sustainability equally.
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Skilled Workforce: Cummins India benefits from a highly skilled and trained workforce, with programs in place for ongoing professional development. This talent pool drives innovation and operational efficiency.
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Customer-Centric Approach: The company’s dedication to understanding and addressing customer needs leads to long-term relationships and repeat business, differentiating it from competitors who may not prioritize customer engagement as effectively.
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Strategic Collaborations and Partnerships: Cummins often collaborates with other companies and institutions for technological advancements, which helps in leveraging additional expertise and resources.
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Robust Financial Performance: Strong financial health gives Cummins India the flexibility to invest in growth opportunities, manage economic downturns, and implement strategic initiatives that other, less financially stable companies might struggle to execute.
These competitive advantages enable Cummins India Ltd to maintain its leadership position in the engines and power generation market while continuing to innovate and expand its offerings.
Cummins India Ltd, as a leader in the manufacturing of engines and power generation equipment, faces several risks and challenges in the near future:
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Economic Downturns: A slowdown in economic growth can reduce demand for industrial engines and power generation solutions, impacting sales and profitability. Factors such as inflation or geopolitical tensions may affect overall economic performance.
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Supply Chain Disruptions: The COVID-19 pandemic highlighted vulnerabilities in global supply chains. Future disruptions due to natural disasters, trade disputes, or logistical challenges can affect production capabilities and lead to increased costs.
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Technological Disruption: Rapid advancements in technology, particularly in electric vehicles (EVs) and renewable energy, pose a risk to traditional engine markets. Cummins needs to innovate to remain competitive and pivot toward sustainable technologies.
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Regulatory Challenges: Compliance with stringent environmental regulations and emissions standards worldwide can increase operational costs. Changes in government policies or regulations can significantly impact business operations and strategies.
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Competition: Increased competition from both domestic and international companies, especially in the context of electric power solutions and alternative energy sources, may erode market share and pressure pricing.
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Cost Fluctuations: Rising costs of raw materials and components, combined with volatility in prices, can lead to squeezed margins. With the ongoing fluctuations in the availability of key resources, managing costs will be crucial.
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Global Operations: As a multinational corporation, Cummins India faces risks related to foreign exchange fluctuations, geopolitical issues, and risks associated with international trade such as tariffs and trade barriers.
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Talent Retention and Management: Attracting and retaining skilled talent in a competitive labor market is essential for innovation and operational efficiency. Challenges in workforce management can impact productivity and business continuity.
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Market Demand Shifts: A shift in customer preferences towards greener solutions may necessitate that Cummins continually adapt its product offerings, which requires investment in R&D and might involve risks associated with new product launches.
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Sustainability Integration: The increasing focus on sustainability means companies face pressure to integrate sustainable practices effectively. Failing to do so can diminish brand reputation and customer loyalty.
In addressing these risks and challenges, Cummins India Ltd must implement robust risk management strategies, invest in R&D, and remain agile to adapt to changing market dynamics.
Revenue & Expenses Breakdown
Cummins India Ltd
Balance Sheet Decomposition
Cummins India Ltd
Current Assets | 59.4B |
Cash & Short-Term Investments | 27.3B |
Receivables | 20.9B |
Other Current Assets | 11.3B |
Non-Current Assets | 30.3B |
Long-Term Investments | 14.5B |
PP&E | 12.9B |
Intangibles | 1.3B |
Other Non-Current Assets | 1.5B |
Current Liabilities | 20.6B |
Accounts Payable | 14.1B |
Short-Term Debt | 1B |
Other Current Liabilities | 5.5B |
Non-Current Liabilities | 3B |
Long-Term Debt | 198.5m |
Other Non-Current Liabilities | 2.8B |
Earnings Waterfall
Cummins India Ltd
Revenue
|
91B
INR
|
Cost of Revenue
|
-57.1B
INR
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Gross Profit
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33.9B
INR
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Operating Expenses
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-16.5B
INR
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Operating Income
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17.3B
INR
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Other Expenses
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962.3m
INR
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Net Income
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18.3B
INR
|
Free Cash Flow Analysis
Cummins India Ltd
INR | |
Free Cash Flow | INR |
In Q2 FY 2024-25, Cummins India achieved a remarkable 31% increase in sales to INR 2,444 crores, driven by a 47% jump in domestic sales. Profit before tax rose by 39% year-over-year to INR 594 crores. The company expects double-digit revenue growth for the full fiscal year amid a stable economic outlook. Demand for power generation remains strong with noteworthy contributions from high horsepower generators. However, export sales faced challenges, with a 13% decline due to geopolitical factors. Cummins maintains a robust position to capitalize on growth opportunities, supported by solid infrastructure and talent.
What is Earnings Call?
CUMMINSIND Profitability Score
Profitability Due Diligence
Cummins India Ltd's profitability score is 67/100. The higher the profitability score, the more profitable the company is.
Score
Cummins India Ltd's profitability score is 67/100. The higher the profitability score, the more profitable the company is.
CUMMINSIND Solvency Score
Solvency Due Diligence
Cummins India Ltd's solvency score is 96/100. The higher the solvency score, the more solvent the company is.
Score
Cummins India Ltd's solvency score is 96/100. The higher the solvency score, the more solvent the company is.
Wall St
Price Targets
CUMMINSIND Price Targets Summary
Cummins India Ltd
According to Wall Street analysts, the average 1-year price target for CUMMINSIND is 3 603.32 INR with a low forecast of 2 272.5 INR and a high forecast of 4 890.9 INR.
Dividends
Current shareholder yield for CUMMINSIND is .
Shareholder yield represents the total return a company provides to its shareholders, calculated as the sum of dividend yield, buyback yield, and debt paydown yield. What is shareholder yield?
Ownership
CUMMINSIND Insider Trading
Buy and sell transactions by insiders
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Profile
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Dividend Yield
Description
Cummins India Ltd. engages in the manufacture, design, and distribution of diesel and alternative fuel engines. The company is headquartered in Pune, Maharashtra and currently employs 3,167 full-time employees. The firm operates through two segments: Engines and Lubes. The company comprises of three businesses, which include Engine Business, Power Systems Business and Distribution Business. Its Engine Business manufactures and markets diesel engines for off-highway applications. Its Power Systems Business provides power generation systems for prime, standby and distributes power generation requirements. Its Distribution Business provides products, services, and solutions for uptime of its equipment and engines. Its product category includes engines, generators and power systems and components. Its primary products are compression ignition, internal combustion engines, generator sets, and component or parts. The company serves various industries, such as agriculture, bus, commercial power, construction, marine, rail, oil and gas, trucking and mining.
Contact
IPO
Employees
Officers
The intrinsic value of one CUMMINSIND stock under the Base Case scenario is 1 839.09 INR.
Compared to the current market price of 3 319.4 INR, Cummins India Ltd is Overvalued by 45%.