Cummins India is a buy for target price of ₹4401

[Pee Vee]

Cummins India (KKC) delivered robust performance in Q1FY26 which surpassed our estimates. Revenue, EBITDA and Adjusted PAT for the quarter was higher by 26%, 32% and 28% YoY on consolidated basis. The key positive of the management commentary was demand continuing to remain strong and also being broad based across key growth verticals such as Quick Commerce, Government led infra, manufacturing and pharma. KKC also clocked in healthy gross margin of 37% for the quarter. This is a result of the management’s assiduous efforts in reducing direct material costs, optimizing product mix and suitable pricing. Guidance is of double digit revenue growth in FY26 with the strong domestic infrastructure momentum spurring growth. We reiterate our positive stance on the stock and maintain our BUY rating with TP of Rs4,401.

Key Highlights and Investment Rationale

 Sanguine demand momentum to continue: Demand momentum continues to be healthy across the power-gen and the industrial segment. Power-gen segment is exhibiting healthy demand traction across the board with sectors such as quick commerce, roads, hospitals, airports, manufacturing and pharma leading the way. Within the industrial vertical, the construction segment and the compressor segment is exhibiting steady demand while the railways segment performed well in terms of sales of DETC and power cars

 Protecting the HHP turf: The management asserted that the company is taking concrete initiatives to keep the competition at bay in the HHP segment which is the mainstay of the Power-gen vertical for KKC. This includes offering customized and tailored products and solutions for each segment. Competitive intensity has increased in this segment which KKC is mitigating through rigorous cost optimization and reducing product delivery timelines.