Cummins India Shares Slide 6% After Goldman Sachs Downgrade

Cummins India Limited’s shares fell by 6% to ₹3,565 during morning trading on October 11 after Goldman Sachs changed its rating to ‘sell’ and reduced the target price due to various concerns about the company.

Goldman Sachs set a target price of ₹2,900, indicating a potential decline of 23% from the last closing price of ₹3,783 on the NSE. Since the beginning of the year, Cummins India shares have increased by 83%.

Analysts have pointed out 3 main concerns. The increasing use of Battery Energy Storage Systems (BESS) and other alternatives will likely decrease the overall demand for diesel generators in the medium to long term. Furthermore, a weak economic environment and strict emission regulations may restrict the company’s export growth rates.

During the Q1 earnings call, Cummins management mentioned that rising global metal prices are making it difficult to maintain gross margins. In Q4 FY24, Cummins India reported a 50% year-on-year increase in consolidated net profit to ₹530.5 crore, driven by strong demand in both domestic and international markets. The company’s revenue reached ₹2,319 crore, up 19.9% year-on-year, according to an exchange filing.

About Cummins India Ltd

Cummins India Ltd is a subsidiary of Cummins Inc. Group USA. The company designs, makes, sells, and services diesel and alternative fuel engines ranging from 2.8 to 100 litres. It also produces diesel and alternative-fueled power generators with capacities of up to 3,000 kW (3,750 kVA), along with related components and technology.

On October 11, 2024, Cummins India Ltd opened at ₹3,700.00, touching the day’s low at ₹3,565.00 as of 11:22 AM on NSE. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.