Share of Cummins India Limited rose 6 per cent to hit an intraday high of Rs 904.50 on BSE after Kotak Institutional Equities retained its ‘Buy’ call on the stock with a target price of Rs 1,030 per share.
The brokerage firm has increased the fair value by 10 per cent and noted that the peers of the firm don’t have the margin to cede this time which would boost the company’s pricing power. It added that the transition to CPCB-IV is much steeper than the transition to CPCB-II.
The share opened 1.33 per cent higher at Rs 862.90 against the previous close of Rs 851.50. It has gained 129 per cent in the last 12 months and risen 56 per cent since the beginning of this year.
Cummins share stands higher than 100 day, 200 day moving averages, and lower than 5 day, 10 day, 20 day, 50 day moving averages. Market cap of the firm fell to Rs 24,935.53 crore on BSE.
The company reported a net profit of Rs 168.56 crore for the quarter ended March 2021 compared to Rs 170.24 crore in the year-ago period.
Total income grew 16.4 per cent to Rs 1,314.78 crore in the March quarter against Rs 1129.48 crore in the December quarter.
Exports sales for the year ended March 31, 2021, stood at Rs 1,153 crore, down 11 per cent over the sales of Rs 1,291 crore recorded last year.
“Economic activities and business sentiment picked up from Q2 FY’20. This, coupled with pent-up demand, saw revenue growth recovering from Q2. Government spending on infrastructure and continued strength in Industrial and Powergen segments helped in sequential recovery up to Q3. The onset of the second wave of COVID-19 in March 2021 has impacted overall economic recovery,” said Ashwath Ram, Managing Director, Cummins India Limited.
“With vaccinations likely to pick up in coming weeks, case rates should decline, so we expect the economy to recover from the end of Q2 FY’22 and we expect quarterly improvement. We continue to closely monitor our end markets and are well prepared to scale when the economy picks up,” he noted.
“COVID-19 impacted our export business as well. Demand started to show a gradual improvement in Q3 FY’21. As vaccination rates pick up globally, economic activities are restarting, and we believe most of our end markets will fully recover in FY 22,” he added.
In its outlook for the next fiscal year, India Cements expects a very gradual recovery of demand in upcoming quarters.
