Update | 20 June 2024
Capital Goods
Genset demand remains strong in 1QFY25
Genset channel checks
KKC - Financials Snapshot (INR b)
Y/E MAR
FY24 FY25E FY26E
Net Sales
89.6 106.6 126.3
EBITDA
17.6
21.8 25.9
PAT
16.6
20.6 24.7
EPS (INR)
60.0
74.2 89.0
GR. (%)
33.4
23.7 19.9
BV/Sh (INR)
222.3 251.4 286.2
Ratios
ROE (%)
28.8
31.3 33.1
RoCE (%)
28.1
29.6 31.3
Valuations
P/E (X)
64.3
52.0 43.3
P/BV (X)
17.3
15.3 13.5
EV/EBITDA (X) 59.9
48.2 40.4
Div Yield (%)
0.9
1.1
1.3
Our channel checks with genset players indicate that demand has been good so far in
1QFY25, mainly driven by pre-buying. Leaving aside a minor impact on demand from
elections in May’24, demand is again strong in Jun’24, with faster decision-making from
customers. Channel inventory for CPCB 2 is now largely over and players may see a higher
share of CPCB 4+ sales in Jun’24. Some part of demand driven by pre-buying from the
residential and commercial segments may moderate in Jul-Aug’24, while some end users
will wait for price rationalization for initial few months of the norm change. Export
markets are still weak and companies are already taking initiatives to export new
products, which will start reflecting in a few quarters. We expect both Cummins India
(KKC) and Kirloskar Oil Engines (KOEL) to be ready with their CPCB 4+ product portfolio and
have products in other nodes too to hedge against any temporary demand slowdown after
the norm implementation. We maintain our positive stance on key players in the genset
industry and see KKC gaining market share in the current scenario. We maintain BUY on
both KKC (TP: INR4,300) and KOEL (TP: INR1,500).
KOEL - Financials Snapshot (INR b)
Y/E MAR
FY24 FY25E FY26E
Net Sales
48.5 56.9
67.4
EBITDA
5.6
7.5
9.5
PAT
3.6
5.0
6.4
EPS (INR)
25.0 34.4
44.1
GR. (%)
33.8 37.9
28.1
BV/Sh (INR) 181.2 206.4 238.7
Ratios
ROE (%)
14.6 17.8
19.8
RoCE (%)
14.0 17.1
19.4
Valuations
P/E (X)
53.4 38.8
30.3
P/BV (X)
7.4
6.5
5.6
EV/EBITDA (X) 34.5 25.7
20.1
Div Yield (%)
0.5
0.7
0.9
Key highlights from our interaction with genset players
Demand remains strong in 1QFY25, can see a blip in 2QFY25
Our channel checks with genset industry players indicate that:
1)
The overall genset market stands at nearly INR100b, split 30-35% in LHP, 30-35%
in mid-kVA range and the remaining 30% in HHP.
2)
Domestic demand has remained strong across low-to-mid kVA ranges owing to
pre-buying ahead of CPCB 4+ implementation and strong demand from all
segments - manufacturing, hospitality, residential and commercial construction.
Demand may moderate in Jul-Sep’24.
3)
KKC, KOEL, and Mahindra Powerol form a major portion of overall market
volumes, with KOEL and Mahindra Powerol historically more dominant in the
LHP range. KKC is now also ramping up nodes across all ranges of LHP, which is
covered in CPCB 4+.
4)
HHP range forms the remaining market, which is not covered in CPCB 4+. Data
centers remain a key growth driver for HHP genset, which is growing at a faster
rate than low- to mid-range gensets. KKC is a leader in the HHP segment and
KOEL’s sales for its Opti-prime product for 1500/2000 kVA are also picking up
and is waiting for certifications for data centre.
5)
Supply chain is currently ready to shift toward new products from Jul’24 and we
do not see the possibility of norms getting postponed again.
Pricing will be high initially
Pricing for CPCB 4+ is already higher by 30-40% across most nodes. Within this, KKC
pricing is at 8-10% premium to other players in the market, similar to the historical
trend, and will remain so for new products too. KKC has already indigenized nearly
70-75% of the cost and has a buffer to localize more. KOEL is working on taking
indigenization to 85-88%. After 2-3 quarters, a pricing reduction of 5-10% cannot be
ruled out as most players will achieve desired market volumes and hence may pass
on some cost savings. Genset market will see maturity after 2-3 quarters.
Teena Virmani - Research Analyst
(Teena.Virmani@MotilalOswal.com)
Harsh Tewaney - Research Analyst
(Harsh.Tewaney@MotilalOswal.com)
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.
Investors are advised to refer through important disclosures made at the last page of the Research Report.
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Competition is increasing in smaller nodes
Competition is increasing in smaller nodes of up to 125kVA as KKC has expanded its
presence across lower nodes too, where KOEL and Mahindra Powerol were the
leaders. KOEL is focusing more on a better product mix and an increasing share of
higher HP products rather than chasing volumes. Products of smaller players like
Eicher and Ashok Leyland are relatively cheaper than those of major players by 15-
20% and this discount will remain for CPCB 4+ too. However, for higher kVA nodes,
preference would remain for players having a strong distribution network such as
KKC and KOEL. A close watch on pricing of competitors will be required in coming
quarters.
Export markets to recover in few quarters
For
KKC,
exports were impacted by a sharp demand slowdown across its key export
markets such as the US, Europe, the Middle East, Africa and Asia Pacific. KKC plans
to grow exports through outsourcing opportunities from the parent for LHP genset
as well as customized products related to specific geographies such as South
America. It will take 1-2 quarters to ramp up overall exports.
KOEL’s
exports grew by
32% YoY in FY24, and the company is also evaluating geographies carefully with key
focus on the Middle East and the US. It has appointed GOEM in both markets and
would look to export CPCB 4+ products, along with Opti-prime gensets. KOEL has
already applied for certification for CPCB 4+ products in the US.
Factors to watch out for in next few quarters
Genset market will remain mixed over the next few months owing to several events
such as state election impact, transition to new norms, and expected private capex
recovery in select sectors. We would watch out for the following key factors in
coming quarters: 1) demand from government contracts, railway projects,
infrastructure and real estate; 2) data center-led demand is fairly strong and hence,
we would look for the abilities of players to capitalize on this demand; 3) price
stabilization in the next one year as operating leverage kicks in; and 4) recovery in
exports from current levels.
Growth strategies of players
KKC
is expanding its presence across all nodes and is likely to gain volume market
share in the current norm shift across all nodes till 750kVA. It is already a leader in
the HHP segment and will continue to benefit from the strong demand for HHP from
data centers. Thus, its lower-margin LHP portfolio will be compensated by the high-
margin HHP portfolio.
KOEL
is focusing on improving its overall product mix in the
domestic market and is targeting to grow exports too, which will drive margin
improvement for the company.
Valuation and recommendation
KKC is currently trading at 43.3x P/E and KOEL is trading at 30.3x P/E on Mar’26E
EPS. We value KKC at 45x P/E on two-year forward estimates and KOEL at 29x P/E on
two-year forward estimates for core business. We maintain BUY on both KKC (TP:
INR4,300) and KOEL (TP: INR1,500) as they are ready to tide over the emission norm
transition.
20 June 2024
2
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Demand growth to be led by real estate launches and data center expansion
Exhibit 1:
Residential real estate launches were strong in
last two years and would drive genset demand
New launches (residential - mn sq ft)
625
642
440
851
893
41
36
27
Exhibit 2:
Commercial real estate launches were also strong
in last two years and would drive genset demand
New launches (commercial - mn sq ft)
51
34
39
38
52
48
550
410
504
538
Source: Propequity
Source: Propequity
Exhibit 3:
Data Centre market is growing very fast and
seeing investments of USD4-5b in capacity ramp-up (MW)
Installed DC capacity in India (MW)
2,000
1,700
1,400
670 740
540 566 597 631
870
Exhibit 4:
Powergen segment sales of KKC have a high
correlation with IIP growth (%)
KKC Powergen segment (%) - LHS
IIP growth (%) - RHS
300
200
100
0
-100
60
35
10
-15
-40
75 185
315
Source: CRISIL, MOFSL
Source: MOSPI, MOFSL
Exhibit 5:
Powergen
segment
sales of KKC have moved up more than KOEL in FY24 due to data centers led demand too
KKC Powergen revenue trend (INR m)
KOEL Powergen revenue trend (INR m)
Powergen (INR m)
265.6
145.2
33.0
18.7 32.7 41.3
6.3
42.1 42.7
75.4
-28.0
50.7
40.2
YoY growth (%)
Powergen (INR m)
219.3
57.4
-9.6
19.8
11.7 10.8
YoY Growth (%)
47.7
7.0 23.1 20.0
55.0
-8.4
5.2
10.7
Source: Company, MOFSL
Source: Company, MOFSL
20 June 2024
3
 Motilal Oswal Financial Services
Sector Update | Capital Goods
CPCB 4+ transition entails price hikes of 20-40%
Exhibit 6:
KKC commands a premium as seen in price points of key nodes for players for
CPCB 2 products (INR)
Node
15kva
62.5kva
125kva
160kva
200kva
320kva
400kva
500kva
625kva
750kva
1010kva
1250kva
1500kva
2000kva
2750kva
Cummins
3,50,000
5,60,000
7,75,000
11,48,000
12,10,000
19,50,000
29,45,000
32,00,000
38,50,000
49,55,000
70,00,000
98,00,000
1,35,00,000
1,50,00,000
1,70,00,000
KOEL
2,30,000
4,90,000
7,25,000
11,20,000
11,25,000
18,40,000
24,00,000
28,00,000
35,00,000
48,00,000
65,00,000
90,00,000
1,10,00,000
Mahindra
2,90,000
5,38,000
6,94,243
10,62,000
11,50,000
19,00,000
22,50,000
28,50,000
36,50,000
Perkins
Baudouin
24,00,000
28,00,000
37,00,000
43,50,000
70,00,000
1,00,00,000
1,00,00,000
2,00,00,000
21,56,000
23,10,000
28,00,000
39,00,000
48,00,000
70,00,000
92,00,000
1,05,00,000
1,66,00,000
Source: Channel checks, Industry, MOFSL
Exhibit 7:
Prices for CPCB 4+ products are at substantial premium to similar nodes for CPCB
2 (INR)
Node
15kva
20kva
30kva
40kva
58.5kva
82.5kva
100kva
125kva
160kva
180kva
200kva
250kva
320kva
500kva
Cummins
3,55,000
4,00,000
6,78,000
7,38,000
9,50,000
11,85,000
11,60,000
12,25,000
16,00,000
17,79,738
21,51,000
22,50,000
28,80,000
43,00,000
KOEL
3,60,000
3,40,000
6,25,000
7,67,000
8,66,000
11,80,000
12,50,000
13,25,000
17,00,000
18,75,326
23,65,000
40,00,000
Source: Channel checks, Industry, MOFSL
Exhibit 8:
Pig iron prices have started moving up from the lows of Dec’23
70,000
55,000
40,000
25,000
10,000
Pig Iron (INR/t)
Source: Company, MOFSL
20 June 2024
4
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Companies are taking steps to improve exports
Exhibit 9:
KKC exports have a strong correlation with India’s overall exports (%)
Export growth of capital goods (%)
55.0
35.0
15.0
-5.0
-25.0
Source: Company, MOFSL
Export growth of Cummins (%)
Exhibit 10:
Engineering goods exports have been muted in the past few months; expected
to see a gradual improvement as macro challenges ease (USD b)
Monthly trend in exports (USD b)
9.7 9.7 9.6 9.4
8.4 8.4
7.4
8.1
10.2
9.1
8.4 8.6
9.0
9.3
8.5 8.7
9.1 8.9
8.1 7.8
10.0
8.8
9.9
8.7
11.3
Source: Company, MOFSL
Exhibit 11:
KKC exports continue to struggle owing to
weakness across geographies (INR m)
Exports (INR m)
144.4
69.2 57.5
-3.1
10.3
17.6
YoY growth (%)
Exhibit 12:
KOEL’s exports have started recovering as it
continues to focus on improving exports (INR m)
Exports (INR m)
YoY Growth (%)
69.6
1,250
21.0 23.0 16.5
3.1 -4.5
26.5
-39.9-30.2
11.6
680
1,120
1,120
1,020
860
20.5
1,350
1,730
Source: Company, MOFSL
Source: Company, MOFSL
20 June 2024
5
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Exhibit 13:
Sum-of-the-parts valuation of KOEL on Jun’26 estimates (INR/share)
Earnings/
book
(INR m)
KOEL valuation
Core business
Investments
La Gajjar Machineries
Arka Fincap
Total
6,971
104
11,100
Valn
multiple
(X)
29.0
12.0
1.3
Value
(INR m)
2,02,155
1,251
14,541
KOEL's
share
(%)
100.0
100.0
100.0
Value for
Per share
KOEL's share
value
(INR m)
(INR)
2,02,155
1,251
14,541
2,17,947
1,395
9
100
1,504
Valuation basis
29x P/E two-year forward earnings
12x P/E two-year forward earnings
1.3x P/BV on expanded book of FY26E
Source: MOFSL
Exhibit 14:
KKC is trading at 43x Mar’26 estimates
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
Exhibit 15:
KOEL is trading at 30x Mar’26 estimates
P/E (x)
Min (x)
Avg (x)
+1SD
Max (x)
-1SD
43.3
35.4
26.6
17.8
10.9
9.6
24.8
17.2
4.9
32.5
Source: Company, MOFSL
Source: Company, MOFSL
20 June 2024
6
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Financial Summary – Kirloskar Oil Engines
Standalone Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
Gross Profit
Employees Cost
Other Expenses
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
EO Items
PBT after EO Exp.
Total Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
FY20
28,775
-10.2
18,740
10,035
2,178
5,439
26,357
91.6
2,418
8.4
666
1,752
38
374
2,087
165
2,252
548
24.3
1,704
1,579
-29.8
5.5
FY21
26,944
-6.4
17,431
9,513
1,989
4,686
24,106
89.5
2,838
10.5
622
2,217
64
245
2,398
-84
2,314
617
26.6
1,697
1,759
11.4
6.5
FY22
32,997
22.5
22,912
10,085
2,070
5,327
30,309
91.9
2,688
8.1
772
1,915
62
248
2,100
527
2,627
547
20.8
2,080
1,663
-5.4
5.0
FY23
41,161
24.7
27,897
13,264
2,365
6,630
36,892
89.6
4,269
10.4
848
3,422
54
273
3,641
0
3,641
939
25.8
2,703
2,703
62.5
6.6
FY24
48,505
17.8
32,439
16,066
3,069
7,355
42,864
88.4
5,642
11.6
970
4,672
78
274
4,868
0
4,868
1,252
25.7
3,616
3,616
33.8
7.5
(INR m)
FY25E
FY26E
56,920
67,370
17.3
18.4
37,852
44,801
19,068
22,569
3,415
4,042
8,117
9,069
49,384
57,912
86.8
86.0
7,536
9,458
13.2
14.0
999
1,131
6,537
8,328
132
90
313
371
6,718
8,609
0
0
6,718
8,609
1,732
2,220
25.8
25.8
4,986
6,389
4,986
6,389
37.9
28.1
8.8
9.5
E: MOFSL Estimates
(INR m)
FY26E
290
34,267
34,557
1,019
100
35,676
24,552
16,273
8,279
2,426
18,762
21,199
7,271
7,895
4,503
1,122
408
14,991
10,103
3,087
1,800
6,208
35,675
Standalone Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans & Adv.
Inventory
Accounts Receivable
Cash and Bank Balance
Loans and Advances
Other Assets
Curr. Liability & Prov.
Accounts Payable
Other Current Liabilities
Provisions
Net Current Assets
Appl. of Funds
FY20
289
18,013
18,302
156
52
18,510
14,904
11,281
3,623
744
11,014
9,203
3,003
3,628
171
1,349
1,051
6,073
4,798
696
580
3,129
18,510
FY21
289
19,542
19,832
793
125
20,749
16,281
11,826
4,455
549
15,340
8,092
2,652
3,558
294
872
716
7,686
6,419
646
622
406
20,749
FY22
289
21,105
21,395
976
146
22,517
16,990
12,488
4,502
393
16,722
8,505
3,031
3,945
314
656
558
7,606
6,175
729
702
899
22,517
FY23
290
23,028
23,318
751
61
24,131
17,425
13,174
4,251
664
16,925
11,557
4,685
4,672
338
852
1,011
9,267
6,326
1,700
1,241
2,291
24,131
FY24
290
25,937
26,227
2,091
100
28,418
19,052
14,144
4,908
2,426
18,762
13,115
5,235
5,684
980
808
408
10,793
7,274
2,223
1,296
2,322
28,418
FY25E
290
29,588
29,878
1,219
100
31,197
22,552
15,142
7,410
2,426
18,762
15,264
6,143
6,670
1,095
948
408
12,665
8,536
2,609
1,521
2,599
31,196
20 June 2024
7
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Financial Summary – Kirloskar Oil Engines
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Creditor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
Standalone Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Depreciation
Interest & Finance Charges
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
Others
CF from Operating incl EO
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Inc/(Dec) in Debt
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Closing Balance
FY20
10.9
15.5
126.4
7.8
66.5
122.4
86.1
10.6
6.7
79.9
0.6
10.6
8.8
8.8
21.5
1.9
1.6
38
46
61
1.5
45.9
-0.6
FY21
12.2
16.4
137.0
1.5
12.8
109.9
81.2
9.7
7.2
68.3
0.1
27.5
9.2
9.2
29.2
1.7
1.3
36
48
87
1.1
34.9
-0.7
FY22
11.5
16.8
147.8
4.7
32.6
116.2
79.4
9.0
5.9
72.2
0.4
7.9
8.1
8.0
31.4
1.9
1.5
34
44
68
1.1
30.7
-0.8
FY23
18.7
24.5
161.1
5.0
26.8
71.5
54.4
8.3
4.7
45.4
0.4
9.6
12.1
11.8
45.0
2.4
1.7
42
41
56
1.2
63.8
-0.7
FY24
25.0
31.7
181.2
6.7
26.8
53.4
42.1
7.4
4.0
34.5
0.5
10.9
14.6
14.0
55.7
2.5
1.7
39
43
55
1.2
60.0
-0.7
FY25E
34.4
41.4
206.4
9.2
26.8
38.8
32.3
6.5
3.4
25.7
0.7
17.0
17.8
17.1
64.0
2.5
1.8
39
43
55
1.2
49.4
-0.6
FY26E
44.1
52.0
238.7
11.8
26.8
30.3
25.7
5.6
2.8
20.1
0.9
37.4
19.8
19.4
65.4
2.7
1.9
39
43
55
1.4
93.0
-0.6
(INR m)
FY26E
8,609
1,131
90
-2,220
-201
7,408
0
7,408
-2,000
5,408
0
0
-2,000
-200
-90
-1,710
0
-2,000
3,408
1,095
4,503
FY20
2,252
666
38
-679
407
2,685
-396
2,289
-752
1,537
4,159
-4,995
-1,588
10
-38
-940
-1,422
-2,391
-1,690
1,861
172
FY21
2,314
622
38
-324
2,654
5,304
-42
5,262
-1,282
3,979
-2,855
-1,316
-5,453
613
-62
-217
-20
314
123
171
294
FY22
2,627
772
50
-567
-157
2,726
-782
1,944
-804
1,140
680
-8,870
-8,994
172
-53
-578
7,529
7,070
20
294
314
FY23
3,641
848
35
-960
-1,025
2,539
61
2,601
-1,206
1,394
3,235
-3,585
-1,556
-236
-50
-723
-12
-1,021
23
314
338
FY24
4,868
970
78
-1,084
-441
4,391
-52
4,339
-2,757
1,582
-1,091
-334
-4,182
1,338
-107
-724
-21
486
643
338
980
FY25E
6,718
999
132
-1,732
-162
5,955
0
5,955
-3,500
2,455
0
0
-3,500
-200
-132
-1,335
-673
-2,340
115
980
1,095
20 June 2024
8
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Financial Summary – Cummins India
Standalone Income Statement
Y/E March
Total Income from Operations
Change (%)
Raw Materials
Gross Profit
Employee Cost
Other Expenses
Total Expenditure
% of Sales
EBITDA
Margin (%)
Depreciation
EBIT
Int. and Finance Charges
Other Income
PBT bef. EO Exp.
PBT after EO Exp.
Total Tax
Tax Rate (%)
Reported PAT
Adjusted PAT
Change (%)
Margin (%)
Standalone Balance Sheet
Y/E March
Equity Share Capital
Total Reserves
Net Worth
Total Loans
Deferred Tax Liabilities
Capital Employed
Gross Block
Less: Accum. Deprn.
Net Fixed Assets
Capital WIP
Total Investments
Curr. Assets, Loans & Adv.
Inventory
Account Receivables
Cash and Bank Balance
Loans and Advances
Other Current Assets
Curr. Liability & Prov.
Other Current Liabilities
Provisions
Net Current Assets
Misc Expenditure
Appl. of Funds
FY20
51,577
-8.9
33,679
17,899
5,602
6,434
45,715
88.6
5,863
11.4
1,187
4,676
203
3,315
7,789
7,590
1,297
17.1
6,293
7,072
-3.2
13.7
FY21
43,292
-16.1
27,606
15,687
4,926
4,965
37,497
86.6
5,795
13.4
1,255
4,540
162
3,702
8,080
8,080
1,901
23.5
6,179
6,350
-10.2
14.7
FY22
61,404
41.8
41,068
20,336
5,956
5,529
52,553
85.6
8,851
14.4
1,340
7,511
115
2,875
10,271
11,330
2,463
21.7
8,866
8,284
30.5
13.5
FY23
77,444
26.1
52,309
25,135
6,298
6,411
65,018
84.0
12,426
16.0
1,405
11,022
158
4,200
15,064
14,921
3,623
24.3
11,298
12,460
50.4
16.1
FY24
89,586
15.7
57,701
31,886
7,793
6,479
71,972
80.3
17,614
19.7
1,576
16,037
268
5,678
21,448
21,431
4,824
22.5
16,606
16,623
33.4
18.6
FY25E
1,06,607
19.0
68,664
37,944
8,782
7,372
84,818
79.6
21,789
20.4
1,625
20,164
295
5,786
25,656
25,656
6,170
24.0
19,486
20,567
23.7
19.3
(INR m)
FY26E
1,26,343
18.5
81,375
44,968
10,408
8,683
1,00,466
79.5
25,877
20.5
1,942
23,935
295
7,150
30,791
30,791
7,404
24.0
23,386
24,663
19.9
19.5
FY20
554
41,195
41,750
4,854
800
47,404
20,894
8,617
12,277
800
18,606
27,713
5,729
11,316
4,538
2,448
3,682
12,137
9,650
2,487
15,576
144
47,404
FY21
554
43,513
44,068
156
823
45,047
20,337
8,684
11,654
1,275
13,892
29,950
5,578
10,745
9,652
1,517
2,459
11,922
9,723
2,199
18,029
199
45,047
FY22
554
47,972
48,527
3,933
971
53,430
22,278
10,024
12,254
608
15,939
39,230
7,288
12,473
14,267
2,646
2,556
14,621
12,362
2,258
24,609
21
53,430
FY23
554
53,125
53,680
3,500
1,057
58,237
23,458
11,429
12,030
413
21,042
41,625
8,862
15,927
13,808
539
2,488
16,883
14,497
2,386
24,741
11
58,237
FY24
554
61,077
61,631
1,000
941
63,572
26,183
13,005
13,178
968
21,927
48,884
9,369
20,776
15,047
505
3,188
21,413
18,602
2,810
27,472
27
63,572
(INR m)
FY25E
FY26E
554
554
69,124
78,794
69,678
79,348
1,000
1,000
941
941
71,619
81,289
30,213
35,147
14,505
16,447
15,708
18,700
608
608
21,036
21,036
57,488
68,464
12,209
14,469
21,925
25,984
19,336
23,250
601
712
3,417
4,050
23,220
27,518
19,949
23,642
3,271
3,877
34,268
40,946
0
0
71,619
81,289
E: MOFSL Estimates
20 June 2024
9
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Financial Summary – Cummins India
Ratios
Y/E March
Basic (INR)
EPS
Cash EPS
BV/Share
DPS
Payout (%)
Valuation (x)
P/E
Cash P/E
P/BV
EV/Sales
EV/EBITDA
Dividend Yield (%)
FCF per share
Return Ratios (%)
RoE
RoCE
RoIC
Working Capital Ratios
Fixed Asset Turnover (x)
Asset Turnover (x)
Inventory (Days)
Debtor (Days)
Leverage Ratio (x)
Current Ratio
Interest Cover Ratio
Net Debt/Equity
Standalone Cash Flow Statement
Y/E March
OP/(Loss) before Tax
Direct Taxes Paid
CF from Operations
(Inc)/Dec in FA
Free Cash Flow
(Pur)/Sale of Investments
Others
CF from Investments
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Opening Balance
Other adjustments
Closing Balance
FY20
26
29.8
150.6
17.0
90.3
151.1
129.4
25.6
20.7
182.4
0.4
13.1
17.0
14.6
15.6
2.5
1.1
41
80
2.3
23.1
-0.4
FY21
23
27.4
159.0
14.0
62.8
168.3
140.5
24.3
24.5
182.8
0.4
24.3
14.8
13.9
15.9
2.1
1.0
47
91
2.5
28.1
-0.5
FY22
30
34.7
175.1
10.5
32.8
129.0
111.1
22.0
17.2
119.6
0.3
28.1
17.9
16.8
27.4
2.8
1.1
43
74
2.7
65.3
-0.5
FY23
45
50.0
193.7
25.0
61.3
85.8
77.1
19.9
13.7
85.2
0.6
23.7
24.4
21.0
36.6
3.3
1.3
42
75
2.5
69.8
-0.6
FY24
60
65.7
222.3
35.2
58.7
64.3
58.7
17.3
11.8
59.9
0.9
36.0
28.8
28.1
51.1
3.4
1.4
38
85
2.3
59.9
-0.6
FY25E
74
80.1
251.4
41.3
58.7
52.0
48.2
15.3
9.9
48.2
1.1
54.6
31.3
29.6
54.4
3.5
1.5
42
75
2.5
68.5
-0.6
FY26E
89
96.0
286.2
49.5
58.7
43.3
40.2
13.5
8.3
40.4
1.3
64.7
33.1
31.3
54.2
3.6
1.6
42
75
2.5
81.3
-0.5
(INR m)
FY26E
30,263
-7,404
22,859
-4,934
17,925
0
0
-4,934
-13,717
-295
-14,011
3,914
19,336
FY20
7,599
-1,609
5,990
-2,366
3,623
-1,163
1,395
-2,135
-5,681
1,572
-4,109
-254
7,379
-2,587
4,538
FY21
8,711
-832
7,879
-1,140
6,738
-75
1,371
155
-3,881
-4,844
-8,724
-691
4,538
5,804
9,652
FY22
9,614
-2,543
7,071
705
7,776
-7,597
1,030
-5,862
-4,435
3,661
-774
434
9,652
4,181
14,267
FY23
11,631
-3,520
8,111
-1,540
6,571
376
1,857
694
-6,237
-607
-6,844
1,960
14,267
-2,420
13,808
FY24
17,773
-4,972
12,801
-2,812
9,989
-2,967
3,106
-2,673
-8,593
-2,733
-11,326
-1,198
13,808
2,437
15,047
FY25E
25,068
-6,170
18,898
-3,768
15,131
892
0
-2,876
-11,438
-295
-11,733
4,289
15,047
19,336
23,250
E: MOFSL Estimates
20 June 2024
10
 Motilal Oswal Financial Services
Sector Update | Capital Goods
Explanation of Investment Rating
Investment Rating
BUY
SELL
NEUTRAL
UNDER REVIEW
NOT RATED
Expected return (over 12-month)
>=15%
< - 10%
< - 10 % to 15%
Rating may undergo a change
We have forward looking estimates for the stock but we refrain from assigning recommendation
*In case the recommendation given by the Research Analyst is inconsistent with the investment rating legend for a continuous period of 30 days, the Research Analyst shall be within following 30 days take
appropriate measures to make the recommendation consistent with the investment rating legend.
Disclosures
The following Disclosures are being made in compliance with the SEBI Research Analyst Regulations 2014 (herein after referred to as the Regulations).
Motilal Oswal Financial Services Ltd. (MOFSL) is a SEBI Registered Research Analyst having registration no. INH000000412. MOFSL, the Research Entity (RE) as defined in the Regulations, is engaged in
the business of providing Stock broking services, Depository participant services & distribution of various financial products. MOFSL is a listed public company, the details in respect of which are available on
www.motilaloswal.com. MOFSL (erstwhile Motilal Oswal Securities Limited - MOSL) is registered with the Securities & Exchange Board of India (SEBI) and is a registered Trading Member with National
Stock Exchange of India Ltd. (NSE) and Bombay Stock Exchange Limited (BSE), Multi Commodity Exchange of India Limited (MCX) and National Commodity & Derivatives Exchange Limited (NCDEX) for
its stock broking activities & is Depository participant with Central Depository Services Limited (CDSL) National Securities Depository Limited (NSDL),NERL, COMRIS and CCRL and is member of
Association of Mutual Funds of India (AMFI) for distribution of financial products and Insurance Regulatory & Development Authority of India (IRDA) as Corporate Agent for insurance products.
Details of
associate entities of Motilal Oswal Financial Services Limited are available on the website at
http://onlinereports.motilaloswal.com/Dormant/documents/List%20of%20Associate%20companies.pdf
MOFSL and its associate company(ies), their directors and Research Analyst and their relatives may; (a) from time to time, have a long or short position in, act as principal in, and buy or sell the securities or
derivatives thereof of companies mentioned herein. (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial
instruments of the company(ies) discussed herein or act as an advisor or lender/borrower to such company(ies) or may have any other potential conflict of interests with respect to any recommendation and
other related information and opinions.; however the same shall have no bearing whatsoever on the specific recommendations made by the analyst(s), as the recommendations made by the analyst(s) are
completely independent of the views of the associates of MOFSL even though there might exist an inherent conflict of interest in some of the stocks mentioned in the research report.
MOFSL and / or its affiliates do and seek to do business including investment banking with companies covered in its research reports. As a result, the recipients of this report should be aware that MOFSL
may have a potential conflict of interest that may affect the objectivity of this report. Compensation of Research Analysts is not based on any specific merchant banking, investment banking or brokerage
service
transactions.
Details
of
pending
Enquiry
Proceedings
of
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Oswal
Financial
Services
Limited
are
available
on
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website
at
https://galaxy.motilaloswal.com/ResearchAnalyst/PublishViewLitigation.aspx
A graph of daily closing prices of securities is available at
www.nseindia.com, www.bseindia.com.
Research Analyst views on Subject Company may vary based on Fundamental research and Technical
Research. Proprietary trading desk of MOFSL or its associates maintains arm’s length distance with Research Team as all the activities are segregated from MOFSL research activity and therefore it can
have an independent view with regards to Subject Company for which Research Team have expressed their views.
Regional Disclosures (outside India)
This report is not directed or intended for distribution to or use by any person or entity resident in a state, country or any jurisdiction, where such distribution, publication, availability or use would be contrary
to law, regulation or which would subject MOFSL & its group companies to registration or licensing requirements within such jurisdictions.
For Hong Kong:
This report is distributed in Hong Kong by Motilal Oswal capital Markets (Hong Kong) Private Limited, a licensed corporation (CE AYY-301) licensed and regulated by the Hong Kong Securities and Futures
Commission (SFC) pursuant to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) “SFO”. As per SEBI (Research Analyst Regulations) 2014 Motilal Oswal Securities (SEBI Reg.
No. INH000000412) has an agreement with Motilal Oswal capital Markets (Hong Kong) Private Limited for distribution of research report in Hong Kong. This report is intended for distribution only to
“Professional Investors” as defined in Part I of Schedule 1 to SFO. Any investment or investment activity to which this document relates is only available to professional investor and will be engaged only with
professional investors.” Nothing here is an offer or solicitation of these securities, products and services in any jurisdiction where their offer or sale is not qualified or exempt from registration. The Indian
Analyst(s) who compile this report is/are not located in Hong Kong & are not conducting Research Analysis in Hong Kong.
For U.S.
Motilal Oswal Financial Services Limited (MOFSL) is not a registered broker - dealer under the U.S. Securities Exchange Act of 1934, as amended (the"1934 act") and under applicable state laws in the
United States. In addition MOFSL is not a registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the "Acts), and
under applicable state laws in the United States. Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by MOFSL, including the products and
services described herein are not available to or intended for U.S. persons. This report is intended for distribution only to "Major Institutional Investors" as defined by Rule 15a-6(b)(4) of the Exchange Act
and interpretations thereof by SEC (henceforth referred to as "major institutional investors"). This document must not be acted on or relied on by persons who are not major institutional investors. Any
investment or investment activity to which this document relates is only available to major institutional investors and will be engaged in only with major institutional investors. In reliance on the exemption
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("SEC") in order to conduct business with Institutional Investors based in the U.S., MOFSL has entered into a chaperoning agreement with a U.S. registered broker-dealer, Motilal Oswal Securities
International Private Limited. ("MOSIPL"). Any business interaction pursuant to this report will have to be executed within the provisions of this chaperoning agreement.
The Research Analysts contributing to the report may not be registered /qualified as research analyst with FINRA. Such research analyst may not be associated persons of the U.S. registered broker-dealer,
MOSIPL, and therefore, may not be subject to NASD rule 2711 and NYSE Rule 472 restrictions on communication with a subject company, public appearances and trading securities held by a research
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In Singapore, this report is being distributed by Motilal Oswal Capital Markets (Singapore) Pte. Ltd. (“MOCMSPL”) (UEN 201129401Z), which is a holder of a capital markets services license and an exempt
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In respect of any matter arising from or in connection with the research you could contact the following representatives of MOCMSPL. In case of grievances for any of the services rendered by MOCMSPL
write to grievances@motilaloswal.com.
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Email: nainesh.rajani@motilaloswal.com
Contact: (+65) 8328 0276
.
Specific Disclosures
1 MOFSL, Research Analyst and/or his relatives does not have financial interest in the subject company, as they do not have equity holdings in the subject company.
2 MOFSL, Research Analyst and/or his relatives do not have actual/beneficial ownership of 1% or more securities in the subject company
3 MOFSL, Research Analyst and/or his relatives have not received compensation/other benefits from the subject company in the past 12 months
4 MOFSL, Research Analyst and/or his relatives do not have material conflict of interest in the subject company at the time of publication of research report
5 Research Analyst has not served as director/officer/employee in the subject company
6 MOFSL has not acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
7 MOFSL has not received compensation for investment banking/ merchant banking/brokerage services from the subject company in the past 12 months
8 MOFSL has not received compensation for other than investment banking/merchant banking/brokerage services from the subject company in the past 12 months
9 MOFSL has not received any compensation or other benefits from third party in connection with the research report
10 MOFSL has not engaged in market making activity for the subject company
********************************************************************************************************************************
The associates of MOFSL may have:
- financial interest in the subject company
- actual/beneficial ownership of 1% or more securities in the subject company at the end of the month immediately preceding the date of publication of the Research Report or date of the public
appearance.
- received compensation/other benefits from the subject company in the past 12 months
- any other potential conflict of interests with respect to any recommendation and other related information and opinions.; however the same shall have no bearing whatsoever on the specific
recommendations made by the analyst(s), as the recommendations made by the analyst(s) are completely independent of the views of the associates of MOFSL even though there might exist an
inherent conflict of interest in some of the stocks mentioned in the research report.
- acted as a manager or co-manager of public offering of securities of the subject company in past 12 months
- be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the company(ies) discussed herein or act
as an advisor or lender/borrower to such company(ies)
- received compensation from the subject company in the past 12 months for investment banking / merchant banking / brokerage services or from other than said services.
20 June 2024
11
 Motilal Oswal Financial Services
Sector Update | Capital Goods
- Served subject company as its clients during twelve months preceding the date of distribution of the research report.
The associates of MOFSL has not received any compensation or other benefits from third party in connection with the research report
Above disclosures include beneficial holdings lying in demat account of MOFSL which are opened for proprietary investments only. While calculating beneficial holdings, It does not consider demat accounts
which are opened in name of MOFSL for other purposes (i.e holding client securities, collaterals, error trades etc.). MOFSL also earns DP income from clients which are not considered in above disclosures.
Analyst Certification
The views expressed in this research report accurately reflect the personal views of the analyst(s) about the subject securities or issues, and no part of the compensation of the research analyst(s) was, is,
or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report.
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such information and opinions are subject to change without notice. The report is prepared solely for informational purpose and does not constitute an offer document or solicitation of offer to buy or sell or
subscribe for securities or other financial instruments for the clients. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. MOFSL will not
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of Interest Statement incorporated in this document is provided solely to enhance the transparency and should not be treated as endorsement of the views expressed in the report. This information is subject
to change without any prior notice. The Company reserves the right to make modifications and alternations to this statement as may be required from time to time without any prior approval. MOFSL, its
associates, their directors and the employees may from time to time, effect or have effected an own account transaction in, or deal as principal or agent in or for the securities mentioned in this document.
They may perform or seek to perform investment banking or other services for, or solicit investment banking or other business from, any company referred to in this report. Each of these entities functions as
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available in publicly accessible media or developed through analysis of MOFSL. The views expressed are those of the analyst, and the Company may or may not subscribe to all the views expressed
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where such distribution, publication, availability or use would be contrary to law, regulation or which would subject MOFSL to any registration or licensing requirement within such jurisdiction. The securities
described herein may or may not be eligible for sale in all jurisdictions or to certain category of investors. Persons in whose possession this document may come are required to inform themselves of and to
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from, any and all responsibility/liability arising from such misuse and agrees not to hold MOFSL or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOFSL or any
of its affiliates or employees free and harmless from all losses, costs, damages,
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Investment in securities market are subject to market risks. Read all the related documents carefully before investing.
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Registered Office Address: Motilal Oswal Tower, Rahimtullah Sayani Road, Opposite Parel ST Depot, Prabhadevi, Mumbai-400025; Tel No.: 022 - 71934200 / 71934263; www.motilaloswal.com.
Correspondence Address: Palm Spring Centre, 2nd Floor, Palm Court Complex, New Link Road, Malad (West), Mumbai- 400 064. Tel No: 022 71881000. Details of Compliance Officer: Neeraj Agarwal,
Email Id: na@motilaloswal.com, Contact No.:022-40548085.
Grievance Redressal Cell:
Contact Person
Ms. Hemangi Date
Ms. Kumud Upadhyay
Mr. Ajay Menon
Registration details of group entities.: Motilal Oswal Financial Services Ltd. (MOFSL): INZ000158836 (BSE/NSE/MCX/NCDEX); CDSL and NSDL: IN-DP-16-2015; Research Analyst: INH000000412 . AMFI:
ARN .: 146822. IRDA Corporate Agent – CA0579. Motilal Oswal Financial Services Ltd. is a distributor of Mutual Funds, PMS, Fixed Deposit, Insurance, Bond, NCDs and IPO products.
Customer having any query/feedback/ clarification may write to query@motilaloswal.com. In case of grievances for any of the services rendered by Motilal Oswal Financial Services Limited (MOFSL) write to
grievances@motilaloswal.com, for DP to dpgrievances@motilaloswal.com.
Contact No.
022 40548000 / 022 67490600
022 40548082
022 40548083
Email ID
query@motilaloswal.com
servicehead@motilaloswal.com
am@motilaloswal.com
20 June 2024
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