Now Reading: Cummins India rated Buy with Rs 6,400 target on data centre demand
-
01
Cummins India rated Buy with Rs 6,400 target on data centre demand
Cummins India rated Buy with Rs 6,400 target on data centre demand
Brokerage firm Anand Rathi has maintained a Buy rating on Cummins India with a revised target price of Rs 6,400, down from Rs 6,500, citing strong demand for high-horsepower gensets from data…
Brokerage firm Anand Rathi has maintained a Buy rating on Cummins India with a revised target price of Rs 6,400, down from Rs 6,500, citing strong demand for high-horsepower gensets from data centres. The stock is currently trading at Rs 5,230.
The company expects continued growth from data centres for power generation and from railways, mining, defence and marine sectors for industrial applications, despite weakness in construction. Margins softened in the June quarter due to commodity price spikes and employee cost adjustments, but the company aims to maintain margins at 20-21 per cent.
The brokerage has trimmed its earnings estimates for FY27-FY29 by 2-5 per cent to account for near-term margin pressure. Key risks include lower-than-expected demand, higher commodity prices and increased competition.
Indian Opinion Analysis
Cummins India's bet on data centre-linked power demand mirrors a broader trend as hyperscale cloud providers expand in the country. The company commands roughly two-thirds of the domestic genset market, and any sustained weakness in construction, historically its largest end-user, would test whether data centre orders can fully fill the gap. The revised target implies a forward P/E of about 45 times, a premium that hinges on margins recovering to 21 per cent by FY29. Investors will watch the next quarterly commentary for signs that the July 2026 price hike is sticking and whether export recovery in Europe and Asia-Pacific offsets the soft West Asian market.
Source: thehindubusinessline.com
This story was synthesised by AI from the source linked above.
