MOSL: CUMMINS INDIA (Buy)-Results ahead of estimates as all business segments fire up
Cummins India: Results ahead of estimates as all business segments fire up
(KKC IN, Mkt Cap USD2.8b, CMP INR748, TP INR920, 23% Upside, Buy)
- Operating performance meaningfully ahead of expectations: 2QFY19 revenue registered healthy growth of 29% YoY to INR14.9b, ahead of our estimate of INR13.2b. EBITDA grew 50% YoY to INR2.5b (est. of INR2.1b), with margin improving 240bp YoY to16.9% (est. of 15.7%). Margin improvement was driven by better revenue mix and foreign exchange gain during the quarter (+150bp). Adjusted PAT stood at INR2.1b up 38% YoY supported by higher than estimated other income (INR785m v/s INR536m in 2QFY18). For 1HFY19 revenue/EBIDTA/PAT has increased by 14%/30%/24%, respectively, and we expect 2HFY19 revenue/EBIDTA/PAT to grow at 9%/26%/8%, respectively.
- Healthy performance from domestic as well as export business drive 2QFY19 revenue: Domestic business registered robust growth of 35% YoY to INR10b supported by strong growth in the power generation segment (+29% YoY), industrial segment (+41% YoY) and distribution and service segment (+40% YoY). Exports also registered healthy growth of 21% YoY, supported by weak base (-17% YoY in 2QFY18), demand recovery in certain geographies like Middle East, Africa and LATAM and INR depreciation benefits. Demand has picked up in the MHP, HP and HHP nodes.
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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