CUMMINSIND - Investment Analysis: Buy Signal or Bull Trap?
Last Updated Time : 20 Dec 25, 07:05 am
Back to Investment ListInvestment Rating: 4.3
| Stock Code | CUMMINSIND | Market Cap | 1,22,162 Cr. | Current Price | 4,407 ₹ | High / Low | 4,615 ₹ |
| Stock P/E | 54.8 | Book Value | 265 ₹ | Dividend Yield | 1.17 % | ROCE | 37.6 % |
| ROE | 28.8 % | Face Value | 2.00 ₹ | DMA 50 | 4,318 ₹ | DMA 200 | 3,801 ₹ |
| Chg in FII Hold | 0.85 % | Chg in DII Hold | -0.80 % | PAT Qtr | 638 Cr. | PAT Prev Qtr | 555 Cr. |
| RSI | 46.5 | MACD | 51.4 | Volume | 5,26,684 | Avg Vol 1Wk | 3,52,046 |
| Low price | 2,580 ₹ | High price | 4,615 ₹ | PEG Ratio | 1.55 | Debt to equity | 0.00 |
| 52w Index | 89.8 % | Qtr Profit Var | 41.5 % | EPS | 81.6 ₹ | Industry PE | 39.1 |
📊 Analysis: CUMMINSIND demonstrates strong fundamentals with ROE at 28.8% and ROCE at 37.6%, both well above compounding thresholds. Debt-to-equity is 0.00, reflecting a debt-free balance sheet. EPS at 81.6 ₹ and quarterly PAT growth (+41.5%) highlight robust profitability. Valuation is slightly stretched with P/E at 54.8 compared to industry average of 39.1, but PEG ratio of 1.55 suggests growth-adjusted valuation is reasonable. Technicals show RSI at 46.5 (neutral), MACD positive (51.4), and price above both 50 DMA (4,318 ₹) and 200 DMA (3,801 ₹), indicating bullish momentum.
💡 Entry Zone: Ideal entry would be in the 3,900–4,150 ₹ range, closer to valuation comfort and DMA support. Current price (4,407 ₹) is slightly above fair entry zone, but still acceptable for long-term investors given strong fundamentals.
📈 Exit Strategy: If already holding, maintain positions for long-term (3–5 years) as compounding potential is strong. Consider partial profit booking near 4,600–4,700 ₹ resistance if valuations stretch further. Long-term holding is favorable due to high ROE/ROCE, debt-free status, and consistent earnings growth.
Positive
- 📌 Strong ROE (28.8%) and ROCE (37.6%) support long-term compounding
- 📌 Debt-free balance sheet (Debt-to-equity 0.00)
- 📌 EPS at 81.6 ₹ reflects strong profitability
- 📌 Positive MACD and price above DMA levels indicate bullish momentum
Limitation
- ⚠️ Valuation premium: P/E 54.8 vs industry 39.1
- ⚠️ RSI at 46.5 shows neutral momentum
- ⚠️ DII holding decreased (-0.80%)
Company Negative News
- ❌ Slight decline in domestic institutional confidence (DII reduced holdings)
Company Positive News
- ✅ Quarterly PAT growth: 638 Cr. vs 555 Cr. previous quarter (+41.5%)
- ✅ FII holding increased (+0.85%)
Industry
- 🏦 Industry PE at 39.1, sector moderately valued
- 🏦 Capital goods sector benefiting from infrastructure and industrial demand
Conclusion
🔎 CUMMINSIND is a strong candidate for long-term investment with excellent ROE/ROCE, debt-free balance sheet, and consistent earnings growth. Entry near 3,900–4,150 ₹ offers margin of safety. Existing holders should maintain positions for 3–5 years, with partial exits near resistance zones. Long-term compounding potential is robust, making it a high-quality portfolio stock.
Would you like me to extend this into a peer benchmarking overlay comparing CUMMINSIND against other capital goods leaders (like ABB India, Siemens, and Thermax) to highlight relative valuation comfort zones?
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