MOSL: CUMMINS INDIA (Neutral)-Domestic business witnessing strong demand revival-Competitive intensity remains fierce
​CUMMINS INDIA: Domestic business witnessing strong demand revival; Competitive intensity remains fierce
(KKC IN, Mkt Cap USD3.8b, CMP INR921, TP INR950, 3% Upside, Neutral)
We recently met multiple channel partners/dealers/OEMs of diesel genset manufacturers in India to understand the domestic demand scenario. Key takeaways:
HHP witnessing strong revival; ~50% of Cummins India’s (KKC) power gen sales come from this segment
- The high horsepower (HHP; >750kva) market has started witnessing increased enquiries from customers, who appear willing to convert those into firm orders. Similar trends are being witnessed in the medium horsepower (MHP; 250-650kva) market.
- Key end-markets that are leading to a revival in the genset market include: a) Datacenters (>1000kva), b) IT/ITES, c) Roads (200/500/600kva), d) Metros (500/750kva), e) Hospitals, f) Hotels, g) Educational institutions and h) Rail generators (500/750kva).
- Dealers expect 10-15% growth in MHP/HHP sales in FY18 for the industry, while low horsepower (LHP; <160kva) sales are likely to remain subdued due to lower telecom genset sales.
Cummins India is engaged in the manufacturing of diesel and natural gas engines. Co.'s operations are comprised of four business units; Industrial Engine, which caters to the industrial sector with its spectrum of diesel engines ranging from 65 HP to 3500 HP; Power Generation, which addresses standby and prime power needs through the design and manufacture of pre-integrated generator sets, transfer switches, paralleling equipment and controls; Distribution, which provides products, packages, services and solutions for uptime of Co. equipments; and Automotive, which integrates Co.'s diesel and natural gas engines with related technologies.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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