Cummins, Kirloskar Oil, Voltamp Transformers, Ador Welding Gets A 'Buy' As IDBI Capital Initiates Coverage

IDBI Capital Report

India stands at a cusp of transformation, aiming to grow into a $10 trillion economy over the next decade. By adding $1 trillion every 1.5 years going forward, India is forecasted to emerge as the third-largest global economy over the next six years.

This incremental growth will primarily be powered by the manufacturing sector, which will contribute 32% to the incremental GVA.

The Government of India has been taking concrete steps to rev up the domestic manufacturing engine through schemes such as Gati Shakti, the National Infrastructure Pipeline and PLI benefits.

Given manufacturing activity has a tremendous multiplier effect on the economy with the ability to create maximum jobs in a populous country like India, the government is aggressively pursuing its “Make in India” initiative through policy boosters and thus capitalise on this sector’s inherent advantage, which is its large domestic market.

We initiate on four companies in the sector which are primed to benefit from this multi-year capex cycle.

Key Highlights

Cummins India Ltd., Buy +18% upside

Robust demand momentum, rich MNC parentage, superior technological prowess and extensive distribution are growth drivers.

Kirloskar Oil Engines Ltd., Buy +21% upside

Strong demand momentum,in-house grown R&D strength and solid market share in mid-range gensets are drivers for our positive view. 

Voltamp Transformers Ltd., Buy +23% upside

Solid demand momentum, excellent customer portfolio, superior product performance and pristine financial discipline are drivers for our sanguine view.

Ador Welding Ltd., Buy +25% upside

Strong Demand momentum, Healthy potential for exports, merger benefits and a robust capex cycle are growth drivers.

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