Cummins has target of Rs 300: Bonanza

Bonanza has recommended long term investors to stay invested in Cummins. Fresh entries can be made only on dips, near Rs 230 level for a target of Rs 300.

“Cummins India Limited (CIL) is a 51 percent subsidiary of Cummins Inc. USA, the world’s largest independent diesel engine designer and manufacturer above 200 HP. CIL is India’s leading manufacturer of diesel engines with a range from 15 hp to 2365 hp, serving the Power Generation, Industrial and Automotive Markets. In Engine segment exports that were about Rs 1300 Crore in FY 09 can fall to Rs.900-1000Crore in FY10. About 30%-35% to growth is expected in domestic business, as there is robust demand for power, railways (largely from new Metro stations coming up at metro cities), reality and construction, increased oil exploration, defense, marine, ports etc. Turnaround in Commercial Vehicles, to also boost sales of Cummins.”

“The FY10 is expected to be challenging year for the company with growth remaining capped. CIL is likely to report an EPS of Rs 23 in FY 10. At CMP Rs 280, it trades at 12 PE based on FY 10 forward earnings. FY11 is expected to be better. The prices appear to have run ahead of fundamentals. Long term investors can stay invested. Fresh entries can be made only on dips, near Rs 230 level for a target of Rs 300 in a year,” says Bonanza’s report.

source: Moneycontorol

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