27 October 2016
2QFY17 Results Update | Sector: Capital Goods
Cummins India
BSE SENSEX
27,916
Bloomberg
Equity Shares (m)
M.Cap.(INR b)/(USD b)
52-Week Range (INR)
1, 6, 12 Rel. Per (%)
Avg Val, (INR m)
Free float (%)
S&P CNX
8,615
KKC IN
277.2
236.2/ 3.5
1,100 / 747
-3/-13/-22
248
49.0
CMP: INR852
TP: INR836 (-2%)
Neutral
Results disappoint; cutting estimates, maintain Neutral
Financials & Valuations (INR b)
Y/E Mar
2016 2017E 2018E
Net Sales
47.0
50.6
57.3
EBITDA
7.7
7.9
9.5
Adj PAT
7.5
7.4
8.6
EPS (INR)
27.2
26.6
31.0
EPS Gr. (%)
-4.0
-2.2
16.3
BV/Sh. (INR)
114.4 125.1 137.5
RoE (%)
24.9
22.6
23.6
RoCE (%)
25.2
22.5
23.8
P/E (x)
31.3
32.0
27.5
P/BV (x)
7.4
6.8
6.2
Estimate change
TP change
Rating change
Weak operating performance:
Cummins India’s (KKC) 2QFY17 revenue grew
7% YoY to INR12.8b (in line with our estimate of INR13b). EBITDA declined
1.4% YoY to INR2b (lower than our estimate of INR2.2b). EBITDA margin shrank
134bp YoY to 15.6% (below our estimate of 17%). PAT declined 0.5% YoY to
INR1.96b (below our estimate of INR2b).
Revenue growth supported by domestic segment as well as bounce back of
export segment:
KKC’s revenue grew 7% YoY, supported by 8% YoY growth in
domestic segment. Domestic revenue was aided by the industrial (up 20%
YoY), automotive (up 13% YoY) and distribution & spares (up 14% YoY)
segments. Exports registered muted growth of 1% YoY after declining for the
last four quarters. KKC has maintained its FY17 revenue guidance for the
export (flat to 5% decline) and domestic (10-12% growth) segments.
Gross margin decline led by weak product mix and decline in exports:
Gross
margin declined 250bp YoY to 35.2%, led by adverse product mix (higher share
of industrial segment and low kva engines) and lower exports. Exports
contributed 35% of total revenue against 38% in 2QFY16. Exports enjoy better
margins than domestic sales.
Premium valuations; retain Neutral:
We cut our earnings estimates by 8% for
FY17 and 3% for FY18 to factor in the prevailing weak product mix, which will
continue to pressurize margins. Given the weak 1HFY17 results, sluggish
outlook for the export segment (35% of sales), and premium valuations, we
maintain our
Neutral
rating on the stock. The stock currently trades at 32x
FY17E EPS of INR26.6 and at 27.5x FY18E EPS of INR31. Our revised target price
is INR836 (27x FY18E EPS). Key risks to our rating are (a) faster than expected
revival in the domestic power generation market, and (b) sharp rise in
commodity prices, leading to pick-up in LHP exports.
(INR Million)
FY16
2Q
3Q
4Q
11,946 11,469 10,614
4.4
5.9
-6.4
2,019 1,550 1,773
6.3 -18.2
0.8
16.9
13.5
16.7
200
201
206
24
2
24
601
566
513
2,396 1,912 2,056
417
288
386
17.4
15.1
18.8
1,980 1,624 1,670
(2.2) (10.3) (12.3)
1,980 1,624 1,670
(2.2) (10.3) (12.3)
1Q
12,590
-3.9
2,063
-6.9
16.4
206
21
416
2,252
440
19.5
1,812
(14.3)
1,812
(14.3)
FY17
FY16 FY17E Vs Est.
2Q
3QE
4QE
1Q
12,790 12,369 12,461 47,130 49,956 12,965
7.1
7.8
17.4
7.0
6.0
8.2
1,990 2,033 2,055 7,822 7,888 2,208
-1.4
31.2
15.9
3.3
12.8
10.0
15.6
16.4
16.5
16.6
15.8
17.0
209
258
216
810
889
245
43
24
24
96
96
24
692
590
594 2,279 2,292
618
2,430 2,341 2,410 9,195 9,196 2,556
461
19.0
1,969
(0.5)
1,969
(0.5)
468
20.0
1,873
15.3
1,873
15.3
470
19.5
1,940
16.2
1,940
16.2
1,561
17.0
7,634
(2.9)
7,634
(2.9)
1,839
20.0
7,357
(3.6)
7,357
(3.6)
511
20.0
2,045
3.0
2,045
3.0
Var.
(%)
-1.4%
-9.9%
-8.6%
KKC: Quarterly Performance (Standalone)
Y/E March
Sales
Change (%)
EBITDA
Change (%)
As of % Sales
Depreciation
Interest
Other Income
PBT
Tax
Effective Tax Rate (%)
Adjusted PAT
Change (%)
Reported PAT
Change (%)
E: MOSL Estimates
1Q
13,101
25.3
2,217
23.3
16.9
203
24
595
2,585
472
18.2
2,114
(0.3)
2,114
(0.3)
-4.9%
-3.7%
-3.7%
Ankur Sharma
(Ankur.VSharma@MotilalOswal.com); +91 22 6129 1556
Amit Shah
(Amit.Shah@MotilalOswal.com); +91 22 6129 1543
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on www.motilaloswal.com/Institutional-Equities, Bloomberg, Thomson Reuters, Factset and S&P Capital.

Cummins India
2QFY17 operating performance below estimates; adverse product mix
impacts the results
Operating performance for 2QFY17 below estimates.
Cummins India’s (KKC)
2QFY17 revenue registered growth of 7% YoY to INR12.8b (in line with our
estimate of INR13b). EBITDA declined 1.4% YoY to INR2b (lower than our
estimate of INR2.2b). EBITDA margin shrank 134bp YoY to 15.6% (below our
estimate of 17%). PAT declined 0.5% YoY to INR1.96b (below our estimate of
INR2b). Profitability miss was primarily on account of adverse product mix
impacting margins.
RM cost as % of revenues increased to 64.8% (vs 62.2% YoY), while staff cost
increased 4.6% YoY to INR1.1b. RM cost increase was on account of adverse
product mix and weak export revenues. Export revenue registered muted
growth of 1% YoY. Management expects operating margins (excluding other
income) to remain stable YoY going ahead.
Other income increased 15% YoY to INR692m, higher than estimates of
INR618m. Increase in other income was on account of rental income of
INR140m received from leasing out of IOC tower 3 to Cummins Inc. Dividend
income from its JV companies remained stable on YoY basis (INR310m vs
INR320m in 2QFY16).
Net profit stood at INR1.97b (down 0.5% YoY) despite 7% growth in revenue on
account of adverse product mix impacting the margins. Tax rate increase was
primarily on account of increase in sales from domestic segment and decline in
exports revenue.
Exhibit 2: RM costs increase led by adverse product mix and
weak exports
RM (% of sales)
Exhibit 1: 2QFY17 revenues up 7% YoY; driven by 11% YoY
growth in domestic segment
Net Sales (INR b)
Growth (YoY, %)
32
11
0 -3 0
22
0
13 11
-14
23
-6
-16
0
6
17
26
4 6
-6 -4
7
Source: Company, MOSL
Source: Company, MOSL
Revenue growth supported by domestic segment as well as bounce back of
export segment:
KKC’s revenue registered revenue growth of 7% YoY supported by 11% YoY
growth in the domestic segment whereas exports registered muted growth of
1% YoY. Domestic revenue was aided by the industrial business (up 20% YoY),
automotive revenue (up 13% YoY) whereas distribution and spares segment
was up 14% YoY. Exports registered muted growth of 1% YoY after declining for
last 4 quarters. KKC has maintained its FY17 guidance for the export segment at
flat to negative 5% and its domestic revenue growth guidance to 10-12%.
Management sounded positive about the domestic market and expects growth
in power gen as well as the industrial segment to remain positive led by
economic cycle recovery. Sectors like mining, railways, infrastructure and data
center segment have started to pick up.
2
27 October 2016

Cummins India
Exports registered muted growth of 1% YoY to INR4.5b led by depressed
demand for LHP/HHP gensets from key markets like LATAM, Africa, Middle East,
China, and Europe. On the back of weak end markets, it expects exports revenue
to remain flat to negative. Management has maintained its guidance for FY17.
3QFY15
6,666
1,018
1,244
8,927
61.6
9.4
11.5
8.3
16.6
0.1
4QFY15
7,159
998
1,419
9,567
63.2
8.8
12.5
20.2
22.2
14.9
1QFY16
8,342
1,027
1,595
10,964
63.5
7.8
12.1
31.7
13.7
12.5
2QFY16
7,470
1,085
1,416
9,970
62.4
9.1
11.8
5.8
6.6
(3.5)
3QFY16
7,351
1,091
1,317
9,759
64.1
9.5
11.5
10.1
7..3
5.8
4QFY16
6,545
1,039
1,362
8,945
61.4
9.8
12.8
6.5
4.1
-4.1
1QFY17
8,030
1,040
1,457
10,527
61.8
8.3
11.6
3.2
4.6
-8.4
2QFY17
8,285
1,125
1,390
10,800
64.8
8.8
10.9
11.0
4.6
-1.9
Exhibit 3: RM cost as well as staff cost increase YoY whereas other expenses were under control
INR M
Raw Materials
Staff Costs
Other Expenses
Total
% of Revenues
Raw Materials
Staff Costs
Other Expenses
% YoY
Raw Materials
Staff Costs
Other Expenses
2QFY15
7,060
1,017
1,467
9,544
61.7
8.9
12.8
28.1
16.1
11.0
Source: Company, MOSL
Valuation and view
Over the past few years, KKC has seeded various growth levers (like LHP gensets
for domestic / exports, Reconditioning and Refurbishment, etc). We expect the
revenue contribution of these segments to increase from 11% of in FY14 to 27%
in FY19E.
Key triggers are:
i) incremental success in LHP genset (both domestic and
exports), which contributed INR5.3b to revenues in FY16 / INR8b in FY17;
internal targets are ~INR15-20b over the next 3-5 years ii) pick-up in the recon
business with CPCB-II implementation (facilities have been recently established
in Phaltan) and iii) accelerated indigenization of CPCB-2 compliant products
supporting margins.
Given the weak 1HFY17 results, and sluggish outlook for the export segment
(35% of Sales) and premium valuations, we maintain our Neutral rating on the
stock with a revised target price of INR836 (27x FY18E EPS). The stock currently
trades at 32x FY17E EPS of INR26.6 and at 27.5x FY18E EPS of INR31. Key risks to
our rating are (a) faster than expected revival in the domestic power generation
market, and (b) sharp rise in commodity prices, leading to pick-up in LHP
exports.
Power generation market bottomed out in FY14 - will see single digit growth
going forward. This segment growth is highly correlated with the rate of change
of GDP growth
Private sector capex is still weak and conditioners are becoming conducive for a
revival in next one year
Cap Utilization is low and are running at 60%
Continue to gain share despite higher competition in the high kva - stepping up
features in product quality, service, localized product, strong supply and
engineering base, strong parent support,
Not seeing any sign of improvement overseas markets - QoQ growth was driven
by supply chain initiatives and not reflective of the overall market
3
Key Highlights of the concall
27 October 2016

Cummins India
Cummins Technical Centre - this is being set up jointly with CIL and Cummins
Inc. with an investment of INR10b and to be operational from Jan17; will
positively impact CIL on margins
Road construction has been seeing good growth with the market up 30-40% in
1H17
Govt is serious on upgrading the defence spending - Navy orders from ship so
marine engine, alternators for coast guard boats, frigates
Rail emphasis by government and KK can offer solutions for engine speed,
safety, lower noise, emission
Margins are near the bottom and should not see much down side, The margin
deterioration is not because of a price cut that is pushing down margins
Increase in raw material prices are/will be offset by cost savings, Q217 margins
will be sustained in 2H17
Change in estimates:
We cut our estimates for FY17/18 by 8/3% respectively mainly
on account of prevailing weak product mix which will continue to pressurize margins
going ahead.
Exhibit 4: Change in estimates (INR m)
New estimates
FY18E
FY16E FY17E
47,043 50,591
57,262
7,736 7,914
9,477
16.4% 15.6%
16.6%
7,543 7,378
8,584
27.2
26.6
31.0
Old Estimate
FY17E
FY18E
50,811
58,249
8,638
10,006
17.0%
17.2%
7,935
8871
28.8
32.0
% Change in Estimate
FY17E
FY18E
0%
-2%
-8%
-5%
-1.4%
-0.6%
-7%
-3%
-8%
-3%
Source: Company, MOSL
Sales
EBITDA
Margin (%)
PAT
EPS (INR)
Exhibit 5: Key operating metrics
FY12
Segmental Revenue (INR m)
Power
- MHP / HHP
- LHP
Industrial
Auto
Distribution
- Spare Parts
- Recon
Domestic
Exports
- HH / HHP
- MHP / LHP
Net Sales
Growth (%)
RM Costs (%)
Gross Margins (%)
EBITDA margin (%)
Net Working Capital (Days)
Net Cash / (Debt), INR m
12,562
9,002
3,560
5,673
2,837
7,699
7,699
28,800
11,720
9,520
2,200
41,172
2%
64.3%
35.7%
16.9%
63.4
2,088
FY13
16,065
16,065
4,000
5,060
1,659
9,080
9,080
nm
32,400
12,690
8,810
3,880
45,894
11%
62.9%
37.1%
18.2%
65.5
3,547
FY14
11,150
7,850
3,300
5,248
1,162
9,090
9,090
nm
27,001
11,990
8,190
3,800
39,767
-13%
61.0%
39.0%
17.5%
81.0
865
FY15
10,550
8,050
2,500
5,070
1,100
9,050
8,800
250
25,990
17,253
9,003
8,250
44,058
11%
61.8%
38.2%
16.7%
82.9
799
FY16
12,500
9,250
3,250
5,600
700
10,000
9,600
400
28,800
16,670
7,770
8,900
47,043
7%
62.9%
37.1%
16.4%
79.1
897
FY17E
13,125
9,713
3,413
7,280
910
11,000
10,200
800
32,315
16,860
6,685
10,175
50,591
8%
64.4%
35.6%
15.6%
79.1
1,283
FY18E
14,700
11,117
3,583
8,736
1,183
12,650
11,849
801
37,269
18,517
7,317
11,200
57,262
13%
63.4%
36.6%
16.6%
79.1
2,825
27 October 2016
4

Cummins India
Financials and valuations
Income Statement
Y/E March
Total Revenues
Change (%)
Raw Materials
Staff Cost
Other Expenses
EBITDA
% of Total Revenues
Depreciation
Other Income
Interest
PBT
Tax
Rate (%)
Adjusted PAT
Extra-ordinary Income (net)
Reported PAT
Change (%)
2012
41,172
1.8
26,454
3,039
4,706
6,972
16.9
420
1,234
54
7,732
2,334
30.2
5,398
514
5,913
0.0
2013
45,894
11.5
28,874
3,386
5,285
8,349
18.2
473
1,577
46
9,407
2,774
29.5
6,633
1,008
7,641
29.2
2014
39,767
-13.4
24,241
3,396
5,162
6,968
17.5
528
1,777
42
8,175
2,175
26.6
6,000
0
6,000
-21.5
2015
44,058
10.8
27,225
3,936
5,547
7,351
16.7
797
2,866
45
9,374
1,515
16.2
7,859
0
7,859
31.0
2016
47,043
6.8
29,592
4,156
5,559
7,736
16.4
810
2,274
96
9,104
1,561
17.1
7,543
0
7,543
-4.0
2017E
50,591
7.5
32,583
4,344
5,750
7,914
15.6
889
2,292
96
9,222
1,844
20.0
7,378
0
7,378
-2.2
(INR Million)
2018E
57,262
13.2
36,307
5,190
6,288
9,477
16.6
1,031
2,380
96
10,730
2,146
20.0
8,584
0
8,584
16.3
Balance Sheet
Y/E March
Share Capital
Reserves
Net Worth
Loans
Deferred Tax Liability
Capital Employed
Gross Fixed Assets
Less: Depreciation
Net Fixed Assets
Capital WIP
Investments
Curr. Assets
Inventory
Debtors
Cash & Bank Balance
Loans & Advances
Other Assets
Current Liab. & Prov.
Current Liabilities
Provisions
Net Current Assets
Application of Funds
E: MOSL Estimates
2012
554
19,877
20,432
147
-70
20,509
9,703
5,054
4,649
497
5,976
19,826
5,676
6,783
2,235
5,082
50
10,438
6,702
3,736
9,388
20,509
2013
554
23,313
23,867
0
328
24,195
10,415
5,480
4,934
1,208
6,276
24,278
5,304
8,550
3,547
6,788
90
12,501
7,719
4,782
11,777
24,195
2014
554
25,097
25,652
0
465
26,117
15,120
5,928
9,192
958
4,954
22,625
5,513
7,820
865
8,405
22
11,611
6,910
4,701
11,014
26,117
2015
554
28,311
28,865
0
631
29,496
18,830
6,491
12,340
1,706
4,650
24,521
6,823
9,355
799
7,472
73
13,721
8,520
5,202
10,800
29,496
2016
554
31,159
31,713
0
817
32,530
19,917
7,301
12,616
5,470
3,354
24,327
6,003
9,506
897
7,363
559
13,238
8,294
4,944
11,090
32,530
2017E
554
34,118
34,672
0
817
35,489
23,917
8,189
15,728
5,470
2,354
25,775
6,275
9,937
1,283
7,697
584
13,838
8,669
5,168
11,937
35,489
(INR Million)
2018E
554
37,560
38,115
0
817
38,932
25,417
9,221
16,196
5,470
2,354
30,610
7,118
11,272
2,825
8,731
663
15,698
9,835
5,863
14,912
38,932
27 October 2016
5

Cummins India
Financials and valuations
Ratios
Y/E March
Basic (INR)
Adj EPS
Cash EPS
Book Value
DPS
Payout (incl. Div. Tax.)
Valuation (x)
P/E
Cash P/E
EV/EBITDA
EV/Sales
Price/Book Value
Dividend Yield (%)
Profitability Ratios (%)
RoE
RoCE
RoIC
Turnover Ratios
Debtors (Days)
Inventory (Days)
Creditors. (Days)
Asset Turnover (x)
Leverage Ratio
Debt/Equity (x)
2012
19.5
21.0
73.7
10.7
50.0
2013
23.9
25.6
86.1
13.0
47.2
2014
21.6
23.5
92.5
13.0
60.1
39.4
36.2
33.8
6.0
9.2
1.5
30.7
28.0
41.2
60
50
46
2.0
0.0
34.7
30.0
44.4
68
42
46
1.9
0.0
24.2
24.4
29.1
72
51
45
1.5
0.0
2015
28.3
31.2
104.1
14.0
49.4
30.1
27.3
32.0
5.4
8.2
1.6
28.8
29.0
26.4
78
57
51
1.5
0.0
2016
27.2
30.1
114.4
14.0
51.5
31.3
28.3
30.4
5.1
7.4
1.6
24.9
25.2
25.4
74
47
44
1.4
0.0
2017E
26.6
29.8
125.1
13.7
51.5
32.0
28.6
29.7
4.8
6.8
1.6
22.6
22.5
22.9
74
47
44
1.4
0.0
2018E
31.0
34.7
137.5
15.9
51.5
27.5
24.6
24.6
4.2
6.2
1.9
23.6
23.8
24.7
74
47
44
1.5
0.0
Cash Flow Statement
Y/E March
PBT before EO Items
Depreciation
Interest
Direct Taxes Paid
(Inc)/Dec in WC
CF from Operations
EO Income
CF from Oper. Incl. EO Items
(Inc)/Dec in FA
Free Cash Flow
Investment & Others
CF from Investments
(Inc)/Dec in Networth
Interest Paid
Dividend Paid
Others
CF from Fin. Activity
Inc/Dec of Cash
Add: Beginning Balance
Closing Balance
E: MOSL Estimates
2012
7,732
420
-126
-2,155
(825)
5,046
-621
4,425
(2,288)
2,137
3,448
1,160
0
-54
-3,452
0
(3,506)
2,079
156
2,235
2013
9,407
473
46
-2,377
(1,562)
5,987
0
5,987
(1,469)
4,518
138
-1,331
998
0
-4,195
-147
(3,344)
1,312
2,235
3,547
2014
8,175
528
-432
-2,308
(1,607)
4,356
-746
3,611
(4,678)
-1,068
5,528
850
0
-42
-4,216
0
(4,258)
203
662
865
2015
9,374
797
-172
-1,853
(815)
7,331
-1,993
5,338
(3,304)
2,035
2,458
-846
0
-45
-4,216
(4,261)
231
568
799
2016
9,104
810
96
-1,561
(287)
8,162
0
8,162
(5,500)
2,662
2,132
-3,368
(178)
0
-4,518
0
(4,695)
99
799
898
2017E
9,222
889
96
-1,844
(558)
7,804
0
7,804
(4,000)
3,804
1,000
-3,000
0
0
-4,419
0
(4,419)
386
898
1,283
(INR Million)
2018E
10,730
1,031
96
-2,146
(1,528)
8,183
0
8,183
(1,500)
6,683
0
-1,500
0
0
-5,141
0
(5,141)
1,542
1,283
2,825
27 October 2016
6

Cummins India
Corporate profile
Company description
Cummins India is a 51 % subsidiary of Cummins Inc.
USA. Cummins India is the country's leading
manufacturer of diesel and natural gas engines for
power generation, industrial and automotive
markets. Cummins in India is a group of eight legal
entities (including Cummins India) across 200
locations in the country with a combined turnover of
USD1.5b in 2013 and employing close to 9,000
individuals.
Source: MOSL/Bloomberg
Exhibit 1: Sensex rebased
Exhibit 2: Shareholding pattern (%)
Promoter
DII
FII
Others
Sep-16
51.0
19.7
16.2
13.2
Jun-16
51.0
19.4
16.3
13.3
Sep-15
51.0
18.1
17.1
13.8
Exhibit 3: Top holders
Holder Name
Life Insurance Corporation Of India
Franklin Templeton Investment Funds
Pinebridge Investments Gf Mauritius Limited
Reliance Capital Trustee Co. Ltd A/C Reliance
equity Opportunities Fund
Axis Mutual Fund Trustee Limited A/C Axis
Mutual Fund A/C Axis Long Term Equity
Fund
% Holding
4.8
2.9
1.4
1.2
1.2
Source: Capitaline
Note: FII Includes depository receipts
Source: Capitaline
Exhibit 4: Top management
Name
Anant J Talaulicar
K Venkata Ramana
Designation
Chairman & Managing Director
Company Secretary
Exhibit 5: Directors
Name
Anant J Talaulicar
Antonio Leitao
Mark Smith
Nasser Munjee*
P S Dasgupta*
Name
Prakash M Telang*
Rajeev Bakshi*
Suzanne Wells
Venu Srinivasan*
Pradeep Kumar Bhargava
Source: Capitaline
*Independent
Exhibit 6: Auditors
Name
Price Waterhouse
S R B C & Co LLP
Type
Statutory
Statutory
Exhibit 7: MOSL forecast v/s consensus
EPS
(INR)
FY17
FY18
MOSL
forecast
26.6
31.0
Consensus
forecast
27.8
31.7
Variation
(%)
-4.3
-2.1
Source: Bloomberg
Source: Capitaline
27 October 2016
7

Disclosures
This document has been prepared by Motilal Oswal Securities Limited (hereinafter referred to as Most) to provide information about the company (ies) and/sector(s), if any, covered in the report and may be distributed by it and/or its
affiliated company(ies). This report is for personal information of the selected recipient/s and does not construe to be any investment, legal or taxation advice to you. This research report does not constitute an offer, invitation or
inducement to invest in securities or other investments and Motilal Oswal Securities Limited (hereinafter referred as MOSt) is not soliciting any action based upon it. This report is not for public distribution and has been furnished to
you solely for your general information and should not be reproduced or redistributed to any other person in any form. This report does not constitute a personal recommendation or take into account the particular investment
objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, investors should consider whether it is suitable for their particular circumstances and, if necessary, seek
professional advice. The price and value of the investments referred to in this material and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for
future performance, future returns are not guaranteed and a loss of original capital may occur.
MOSt and its affiliates are a full-service, integrated investment banking, investment management, brokerage and financing group. We and our affiliates have investment banking and other business relationships with a some
companies covered by our Research Department. Our research professionals may provide input into our investment banking and other business selection processes. Investors should assume that MOSt and/or its affiliates are
seeking or will seek investment banking or other business from the company or companies that are the subject of this material and that the research professionals who were involved in preparing this material may educate investors
on investments in such business . The research professionals responsible for the preparation of this document may interact with trading desk personnel, sales personnel and other parties for the purpose of gathering, applying and
interpreting information. Our research professionals are paid on twin parameters of performance & profitability of MOSt.
MOSt generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any companies that the analysts cover. Additionally, MOSt
generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of any companies that the analysts cover. Our salespeople, traders, and other professionals or affiliates
may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment
decisions that are inconsistent with the recommendations expressed herein. In reviewing these materials, you should be aware that any or all of the foregoing among other things, may give rise to real or potential conflicts of interest.
MOSt and its affiliated company(ies), their directors and employees 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 affiliates of MOSt even though there might exist an inherent
conflict of interest in some of the stocks mentioned in the research report Reports based on technical and derivative analysis center on studying charts company's price movement, outstanding positions and trading volume, as
opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's fundamental analysis. In addition MOST has different business segments / Divisions with independent research
separated by Chinese walls catering to different set of customers having various objectives, risk profiles, investment horizon, etc, and therefore may at times have different contrary views on stocks sectors and markets.
Unauthorized disclosure, use, dissemination or copying (either whole or partial) of this information, is prohibited. The person accessing this information specifically agrees to exempt MOSt or any of its affiliates or employees from,
any and all responsibility/liability arising from such misuse and agrees not to hold MOSt or any of its affiliates or employees responsible for any such misuse and further agrees to hold MOSt or any of its affiliates or employees free
and harmless from all losses, costs, damages, expenses that may be suffered by the person accessing this information due to any errors and delays. The information contained herein is based on publicly available data or other
sources believed to be reliable. Any statements contained in this report attributed to a third party represent MOSt’s interpretation of the data, information and/or opinions provided by that third party either publicly or through a
subscription service, and such use and interpretation have not been reviewed by the third party. This Report is not intended to be a complete statement or summary of the securities, markets or developments referred to in the
document. While we would endeavor to update the information herein on reasonable basis, MOSt and/or its affiliates are under no obligation to update the information. Also there may be regulatory, compliance, or other reasons that
may prevent MOSt and/or its affiliates from doing so. MOSt or any of its affiliates or employees shall not be in any way responsible and liable for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. MOSt or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the
implied warranties of merchantability, fitness for a particular purpose, and non-infringement. The recipients of this report should rely on their own investigations.
This report is intended for distribution to institutional investors. Recipients who are not institutional investors should seek advice of their independent financial advisor prior to taking any investment decision based on this report or for
any necessary explanation of its contents.
Most and it’s associates may have managed or co-managed public offering of securities, may have received compensation for investment banking or merchant banking or brokerage services, may have received any compensation
for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months.
Most and it’s associates have not received any compensation or other benefits from the subject company or third party in connection with the research report.
Subject Company may have been a client of Most or its associates during twelve months preceding the date of distribution of the research report
MOSt and/or its affiliates and/or employees may have interests/positions, financial or otherwise of over 1 % at the end of the month immediately preceding the date of publication of the research in the securities mentioned in this
report. To enhance transparency, MOSt has incorporated a Disclosure of Interest Statement in this document. This should, however, not be treated as endorsement of the views expressed in the report.
Motilal Oswal Securities Limited is registered as a Research Analyst under SEBI (Research Analyst) Regulations, 2014. SEBI Reg. No. INH000000412
Pending Regulatory inspections against Motilal Oswal Securities Limited:
SEBI pursuant to a complaint from client Shri C.R. Mohanraj alleging unauthorized trading, issued a letter dated 29th April 2014 to MOSL notifying appointment of an Adjudicating Officer as per SEBI regulations to hold inquiry and
adjudge violation of SEBI Regulations; MOSL replied to the Show Cause Notice whereby SEBI granted us an opportunity of Inspection of Documents. Since all the documents requested by us were not covered we have requested to
SEBI vide our letter dated June 23, 2015 to provide pending list of documents for inspection.
List of associate companies of Motilal Oswal Securities Limited -Click
here to access detailed report
Cummins India
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. The research analysts, strategists, or research associates principally responsible for preparation of MOSt research receive
compensation based upon various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues
Disclosure of Interest Statement
Analyst ownership of the stock
Served as an officer, director or employee
CUMMINS INDIA
No
No
A graph of daily closing prices of securities is available at www.nseindia.com and http://economictimes.indiatimes.com/markets/stocks/stock-quotes
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 MOSt & 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 Kong 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.
Motilal Oswal Securities Limited (MOSL) 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 MOSL 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 MOSL, 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 from registration provided by Rule 15a-6 of the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act") and interpretations thereof by
the U.S. Securities and Exchange Commission ("SEC") in order to conduct business with Institutional Investors based in the U.S., MOSL 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 analyst account.
For Singapore
Motilal Oswal Capital Markets Singapore Pte Limited is acting as an exempt financial advisor under section 23(1)(f) of the Financial Advisers Act(FAA) read with regulation 17(1)(d) of the Financial Advisors Regulations and is a
subsidiary of Motilal Oswal Securities Limited in India. This research is distributed in Singapore by Motilal Oswal Capital Markets Singapore Pte Limited and it is only directed in Singapore to accredited investors, as defined in the
Financial Advisers Regulations and the Securities and Futures Act (Chapter 289), as amended from time to time.
In respect of any matter arising from or in connection with the research you could contact the following representatives of Motilal Oswal Capital Markets Singapore Pte Limited:
Varun Kumar
Varun.kumar@motilaloswal.com
Contact : (+65) 68189232
Office Address:21 (Suite 31),16 Collyer Quay,Singapore 04931
Kadambari Balachandran
kadambari.balachandran@motilaloswal.com
(+65) 68189233 / 65249115
For U.S
27 October 2016
Motilal Oswal Tower, Level 9, Sayani Road, Prabhadevi, Mumbai 400 025
Phone: +91 22 3982 5500 E-mail: reports@motilaloswal.com
Motilal Oswal Securities Ltd
8