Cummins Q1 Results Review - Demand Remains Strong Across Segments: Motilal Oswal

Motilal Oswal Report

Cummins India Ltd.'s Q1 FY25 results exceeded our and consensus estimates, with 4%/37%/33% YoY growth in revenue/Ebitda/profit after tax. Revenue growth was driven by strong growth in the industrial and distribution segments, while powergen and exports remained weak.

Ebitda margin expanded to 20.3%, driven by improved gross margin and consistent cost reductions. The decline in powergen revenue was in line with our estimate; however, industrial and distribution segments outperformed our estimates. Export markets too appear to have bottomed out with a sequential recovery seen during Q1 FY25.

We continue to maintain our positive stance on Cummins, led by:

1. its strong market positioning across all segments,

2. positive underlying demand drivers,

3. the ability to sustain margins at higher levels, and

4. the ability to benefit from the fast-growing data center market.

We maintain our estimates and reiterate Buy on the stock with a target price of Rs 4,300.

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