Cummins has multiple tailwinds, namely, stringent emission norms, capex cycle recovery, adoption of alternative fuels with lower carbon footprint, revival in industrials and exports, and support for manufacturing policies. We maintain Buy, with a revised SOTP of Rs 4,597 (54x Dec-26 EPS).

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HDFC Securities Institutional Equities

Cummins – Stellar show

Cummins India Ltd. reported strong financial performance with revenue/Ebitda/adjusted profit after tax ahead of our estimates by 7/2.5/(2.4)%.

Domestic business grew 18% YoY along with exports at 43% on the back of resilient overseas demand. During the quarter, Cummins delivered a stellar show across all segments, supported by infrastructure growth, along with intact double-digit revenue growth guidance for FY25. Cummins has the first mover advantage as it introduced CPCB 4+ engine nodes ahead of peers and with peers launching the power gen now, it expects price discovery to get established over a couple of quarters.

Cummins remains confident that its products are competitively priced (on total cost of ownership) and well accepted. Moreover, Cummins highlighted a few concerns w.r.t. exports, led by US tariffs and geopolitical issues which shall be the key monitorable on pricing and strategic assessment.

The company has multiple tailwinds, namely, stringent emission norms, capex cycle recovery, adoption of alternative fuels with lower carbon footprint, revival in industrials and exports, and support for manufacturing policies. We maintain Buy, with a revised SOTP of Rs 4,597 (54x Dec-26 EPS).

Aurobindo Pharma – Muted Q3; scale-up in injectable and margin is key

Ebitda (+2% YoY) was muted as 9% sales growth (+3% QoQ US, +23% EU, and +42% YoY in growth markets) and higher gross margin (+130 bps YoY) were offset by higher staff/selling, general and administrative/research and development costs (+14/ +20%/ +13% YoY). Aurobindo Pharma Ltd. expects-

  1. steady growth in the US oral solid, led by new launches and volume gain,

  2. specialty/injectable to see QoQ recovery on gRevlimid sales and normalized supplies from its Eugia unit 3 in Q4 FY25,

  3. momentum to sustain in the US business in FY26/27,

  4. EU sales at Euro 230+ million quarterly sales rate to sustain,

  5. steady gross margin and Ebitda margin of 21-22% in FY25 (20.6% in 9M) on recovery in injectables and Pen-G plant scale-up (break-even by March 2025),

  6. to launch three biosimilar in the EU market in July-25; sees inflection point by CY28-29 and will look for in-licensing products, and

  7. to file for GLP-1 products in next few years (backward-integrated) in India, emerging markets, and the US.

We have tweaked our estimates and revised the target price to Rs 1,350 (18 times Q3 FY27E). Add stays, given steady growth visibility (US/EU), margin improvement, and monetization of R&D assets (biosimilars, respiratory, and specialty).

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. Read more on Research Reports by NDTV Profit.The brokerage recommends ‘Buy’ rating on Cummins, HG Infra, Bajaj Electricals, and ‘Add’ on Aurobindo, Alkem Labs,PSP Projects, NOCIL – Here’s Why  Read MoreResearch Reports 

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