Sell Cummins India; target of Rs 195: Emkay Global

Emkay Global Financial Services has maintained sell rating on Cummins India with a price target of Rs 195 in its report dated May 27, 2009.

“Cummins India reported its Q4FY09 results which included amalgamation of its two subsidiaries, Cummins Auto Services Limited and Cummins Sales and Services Limited. The results are therefore not comparable. Revenue for the quarter was at Rs 10.2 billion an increase of 53.1%. Net profit increased by 56% to Rs 1.1 billion. During the quarter, exports reported decline of 10% to Rs 3.2 billion. Going forward export segment will remain as a pressure point for Cummins, which was a growth driver in the past six quarters.”

“We expect Cummins to be severally impacted due to slowdown in the capex in general and demand for power gensets in particular. Demand is expected to slowdown significantly from manufacturing, IT/ITES and automotive segment. We expect the company to report net profit of Rs 3.2 billion in FY10 and Rs 3.8 billion in FY11. We expect the company to report consolidated EPS of Rs 16.2 in FY10 and Rs 19.4 in FY11. We maintain our ‘SELL’ rating on the stock with revised target price of Rs 195, based on 10x FY11 earnings,” says Emkay Global Financial Services’ report.

Tags: Emkay Global, hot tips, NSE Tips, sell cummins india, sell rating, sell stocks, share market

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