Cummins India - Research Report

 

Cummins India is a A /T+2 group Diesel Engines company having Face value of Rs 2.00. Cummins, a global power technology solutions provider is a corporation of complementary business segments that design, manufacture, distribute and service a broad portfolio of power solutions. The company’s products range from internal combustion, electric and hybrid integrated power solutions and components including filtration, aftertreatment, turbochargers, fuel systems, controls systems, air handling systems, automated transmissions, electric power generation systems, microgrid controls, batteries, electrolyzer and fuel cell products.

Fundamentals (FY22-23):

CMP	1378
52 - week high	Rs. 1391
52 – week low	Rs 842
Dividend % (consolidated)	925.00%
ROCE	20.31 %
BVPS	180.85
Revenue	6170.92 cr.
Debt to Equity	0.05
P/E ratio	42.83
EPS	32.18
P/B ratio	7.62
Market Cap	38208 cr.
Face value	Rs. 2.0

 

 

Financial Results:

Company’s Net Sales Rs 1,957.28 crore in September 2022 up 13.12%, Quarterly Net Profit at Rs. 267.31 crore in September 2022 up 20.94% and its EBITDA stands at Rs. 358.79 crore in September 2022 up 12.32% compared to September 2021.

List of recent updates regarding the company:

1. Cummins Inc.  (parent company of Cummins India) entered into a definitive agreement to acquire, through a wholly owned subsidiary, all the issued and outstanding shares of fuel cell systems provider Hydrogenics Corporation) for US$15.00 per share.
2. Recently the company also made an open offer to buy up to 26 % stake in the company for the acquisition of 39.29 lakh fully paid-up equity shares at the value of Rs1504.3 per share. It already owns 35.52 % stake in Automotive Axles.
3. Cummins India Limited has collaborated with PI Green Innovations Pvt. Ltd. to launch an innovative clear air solution - Retrofit Emission Control Device (RECD). The company will market RECD through its extensive distribution network in India as part of this contract with PI Green Innovations. RECD is based on Electrostatic Precipitation fundamentals and is built on filter-less technology. It improves air quality and captures Particulate Matter (PM) from the air with more than 70% efficiency.
4. Recently the company acquired of Meritor, Inc., a leading global supplier of drivetrain, mobility, braking, aftermarket and electric powertrain solutions for commercial vehicle and industrial markets. It will position Cummins Inc. as a leading provider of integrated powertrain solutions across internal combustion and electric power applications.
5. Tata Motors, the largest commercial vehicle manufacturer in India, had signed a Memorandum of Understanding (MoU) with Cummins to collaborate on the design and development of low and zero-emission propulsion technology solutions for commercial vehicles in India, including hydrogen-powered internal combustion engines, fuel cells, and battery electric vehicle systems.
6. CUMMINS Inc. also acquired 50% stake in MOMENTUM FUEL TECHNOLOGIES from RUSH ENTERPRISES. The joint venture between Rush Enterprises and Cummins will seek to enhance production of near-zero emissions natural gas powertrains by manufacturing Cummins-branded natural gas fuel delivery systems for the commercial vehicle markets.
7. Cummins India’s global company Cummins revealed its fourth-generation hydrogen fuel cell engine at IAA. Designed to meet the duty-cycle, performance and packaging requirements of medium- and heavy-duty trucks and buses, the fuel cell technology is available in 135 kW single- and 270-kW dual modules. Scania in Europe and Daimler Trucks North America have each announced collaborations with Cummins to develop and integrate these next-generation fuel cell engines.
8. Cummins Inc. engines powered the world's first fleet of hydrogen trains in Bremervörde, Lower Saxony, Germany. The Alstom Coradia iLint trains are outfitted with Cummins fuel cell systems and will run on the world’s first 100%-hydrogen train route in passenger operation.
9. Cummins India Ltd is a leading manufacturer of diesel engines and power generator sets with a 40% market share in the diesel engines/gensets industry. It also has a strong presence in high-value and high-margin high HP gensets.  Each data center needs to be equipped with power backup system, which includes diesel genset as it requires 24*7 power. Thus, there is a huge underlying opportunity in the diesel genset market.
10. Cummins India also has a strong presence in space sector as the specially engineered Cummins generator was used in ISRO’s Chandrayaan – 2 mission and it performed flawlessly to ensure the Chandrayaan-2 had the power to leave the earth.
11. Cummins India’s parent company Cummins Inc introduced the industry’s first unified, fuel-agnostic engines, these platforms will use engine blocks and core components that share common architectures and will be optimized for different low-carbon fuel types.
12. The company recently organized their first roadshow to showcase it’s ‘Made in India’ B6.7 Marine Engines in Kolkata, West Bengal. The Cummins B6.7 Electronic Engine is one of the most dependable and durable medium-duty engines available for the Fishing Boat market. These engines feature a quick response time and rapid acceleration, allowing for ease of operation and assuring reliable performance.

In past three year the stock gave a return of 142.35% as compared to Nifty which gave a return of 53.33% and 142.48% return compared to 52.35% rise in Sensex.

The demand for decarbonized solutions accelerates, ePowertrains will be a critical integration point within hybrid and electric drivetrains creating packaging and performance differentiation and the opportunity to provide advanced clean mobility products for customers. The order visibility continues to remain strong on the back of higher infrastructure spends, PLI investments, 5G and cloud-based data storage driving demand for data centers. Strengthening macroeconomic fundamentals and increased investments in infrastructure, data centres, and commercial realty will further drive demand for backup power. Cummins has already made its strong presence in future technology of alternative fuels that is Hydrogen powered vehicles powered by Hydrogen Fuel cell used engines through its parent company i.e. Cummins Inc. Company also has strong order book, good financial performance backed by the global and strong presence of its parent company Cummins Inc. and ambition of Net Zero emission which will help it in gaining market share in Hydrogen Powered engines in all modes of transport from early stage so, considering all these the stock can be added in portfolio for longer term and higher returns.

- HET ZAVERI

info@smartinvestment.in

 

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