Cummins India Price Target Raises to Rs 5133: Prabhudas Lilladher
Cummins India Reports Strong Quarter, Raises EPS Estimates
Cummins India, a leading player in the power generation and distribution industry, has reported a strong quarter, with revenue growing 22.6% year-over-year (YoY) to Rs30.1 billion. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin remained broadly stable at 21.3% (+17bps YoY), supported by operating leverage and a favorable business mix.
The company's domestic power generation business, which includes data centers, contributed around 30-35% of the revenue, with enquiry momentum coming from both hyperscalers and co-location players. This growth driver was complemented by healthy demand from power generation (ex-data center) customers, including manufacturing, solar cell facilities, pharma, commercial real estate, luxury housing, and quick-commerce infrastructure. This reflects broad-based strength across end markets.
Additionally, the distribution business continues to benefit from a growing installed base, increasing penetration of CPCB IV+ service offerings, and predictive maintenance solutions. While exports demand is expected to remain moderate in Europe and Asia-Pacific markets, the outlook remains healthy driven by rising data center investments, healthy domestic industrial demand, and continued focus on localization, manufacturing modernization, and service-led growth.
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Earnings Estimates Revised
Prabhudas Lilladher's research report has revised its earnings per share (EPS) estimates for Cummins India by +8% for FY27E and +10.4% for FY28E, factoring in healthy domestic power generation demand, increasing contribution from data centers and distribution business, and sustained margin resilience.
Outlook and Rating
The stock is currently trading at a price-to-earnings (P/E) ratio of 59.7x for FY27E and 51.6x for FY28E. However, due to the rally in the stock price, the rating has been downgraded from 'Hold' to 'Reduce' by Prabhudas Lilladher. The revised target price is Rs5,133, down from Rs4,182 earlier.
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| Year | EPS Estimate (Old) | EPS Estimate (New) | Change |
|---|---|---|---|
| FY27E | +8% | ||
| FY28E | +10.4% | ||
| Mar'28E | - | ||
| Sep'27E | 43x |
| Year | P/E Ratio (Old) | P/E Ratio (New) | Change |
|---|---|---|---|
| FY27E | 59.7x | ||
| FY28E | 51.6x | ||
| Mar'28E | 45x | - | |
| Sep'27E | 43x |
Investor Takeaway
Investors should consider revising their price target for Cummins India to Rs 5133 based on the research report.
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