CUMMINSIND - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.6

📊 Core Financials

Earnings Strength: EPS of ₹74.9 and PAT of ₹555 Cr (up 32.3% QoQ) reflect strong profitability and consistent growth.

Return Metrics: ROCE at 37.6% and ROE at 28.8% are exceptional, indicating superior capital efficiency and shareholder value creation.

Debt Profile: Debt-to-equity of 0.00 — completely debt-free, enhancing financial resilience and cash flow flexibility.

Cash Flow: Implied to be robust given high margins and zero debt.

💰 Valuation Indicators

Metric Value Insight

P/E Ratio 55.7 Premium vs. industry PE (44.8), but justified by growth

P/B Ratio ~16.2 High premium over book value

PEG Ratio 1.58 Fairly valued relative to growth

Dividend Yield 1.26% Attractive for a capital goods company

Valuation is elevated, but supported by strong earnings momentum and sector tailwinds.

⚙️ Business Model & Competitive Advantage

Cummins India Ltd. is a leading manufacturer of diesel and gas engines, generator sets, and related components. Key strengths include

Market leadership in the powergen segment, especially high-horsepower gensets

Strategic alignment with CPCB-IV+ emission norms, driving demand

Strong export footprint and customer loyalty

Innovation-led growth and margin expansion across real estate, datacenters, and healthcare

According to ShareKhan Research, Cummins is expected to grow net profit from ₹1,144 Cr in FY23 to ₹2,546 Cr by FY27E, with EPS projected to reach ₹91.8. ROE is forecast to remain above 26% through FY27E.

📈 Technical & Sentiment Indicators

RSI: 73.6 – Overbought zone, suggesting short-term caution.

MACD: 103 – Strong bullish momentum.

Volume Dip – Below weekly average, indicating reduced participation.

DMA 50 & 200: Price is above both, confirming medium-term strength.

💡 Investment Strategy

🔽 Entry Zone

Ideal Buy Range: ₹3,750–₹3,850, near DMA 50 and below current price.

Current Price ₹4,101: Above ideal entry, and technically overbought — wait for a dip.

🕰️ Long-Term Holding

Strong Hold or Accumulate on Corrections: High ROE/ROCE, zero debt, and sector leadership make Cummins India a compelling long-term compounder.

Monitor Export Risks & Valuation: While fundamentals are strong, elevated multiples warrant disciplined entry.

You can explore Simply Wall St’s ROE breakdown or ShareKhan’s full growth forecast for deeper insights. Let me know if you'd like a peer comparison with Kirloskar or Greaves Cotton.

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