"Fuelling" Engines : Initiating Coverage

Initiating Coverage
June 29 th , 2011 BUY Key Take Away CMP Target Price Expected Upside Market Data Nifty Code Sensex Nifty 52 week High/Low Market Cap (Rs Mn) FV
CUMMINSIND
Cummins India Ltd.

Fuelling Engines
Theme Cummins India Limited (CIL) is a 51 percent subsidiary of Cummins Inc. USA, the worlds largest independent diesel engine designer and manufacturer above 200 HP. Set up in 1962, CIL is Indias leading
667 779 18%
manufacturer of diesel engines with a range from 205 hp to 2365 hp and value packages serving the Power Generation, Industrial and Automotive Markets. CIL also caters to the growing market for gas and dual fuel engines. Investment Rationale The Growth Engines to zoom up Cummins India is expected to have a healthy CAGR growth of 13% from FY1214E, in its net income mainly driven by higher engine volumes. The user industries like commercial vehicles, industrial equipments etc. are expected to grow by 9-18 per cent in the next two years according to industry sources. Commanding a Lions share The market size of diesel generation (DG) sets (15-kVA-2,000kVA range) in India stood at INR65.5bn in FY10. A leading dominant player, Cummins had an overall revenue share of 33.9% & a much higher 53.6% share in the 3752,000kVA range. With capacity expansions, increased sales realizations, as well as higher exports from Cummins Inc. will help CIL to increase its market share along with higher revenues. Exports to get boosted Cummins Inc. has identified sourcing of small generators (<200 KVA) from Cummins India Ltd. (CIL) for which expansion plans have already been undertaken at its new factory at Phaltan Megasite. CIL would be investing close to 300-400 crs in FY12 for its capacity expansion plans. This would start contributing to production from FY13 onwards. It is also targeting export revenues of close to 15bln by FY14 from these initiatives.
18492 5545 810/548 132125 2
Shareholding Pattern (%) As on March 2011 Promoters MFs, FIs & Banks FIIs Other Bodies corporate Public and others
51.00 20.96 11.70 6.59 9.75
Comparative Price Movement

25000 20000 15000 10000 5000 0 900 800 700 600 500 400 300 200 100 0
BSE_SENSEX
CIL
Particulars (mns)
2009-10
2010-11
2011-12E
2012-13E
Net Sales % Growth PAT EBIDTA % PAT % EPS PE ROCE % ROE %
28449 -14% 4439 21.5% 15.6% 22.4 22.6 34% 28%
39454 39% 5909 20.4% 15.0% 29.8 22.9 38% 33%
48772 24% 7193 20.1% 14.7% 36.3 18.4 38% 33%
59336 22% 8570 19.6% 14.4% 43.3 15.4 37% 32%
Operating Margins to stay intact Despite significant rise in pig iron prices, CIL has been able to protect its margins and keep it stable at 15% for FY11, which is expected to stay the same with a blend of superior product mix, increase in sales realization per unit & aggressive cost cutting measures. Valuation At the CMP of Rs 667, the stock quotes a PE of 15x and 13x its FY13E and FY14E EPS of Rs 43 and 51 per share respectively. We initiate a coverage with a BUY Rating on the stock, giving a price target of Rs. 779 per share based on its PE of 18x FY13E EPS of Rs. 43.3 per share.
Sr. Analyst : Jigisha Jaini Email: jigishajaini@way2wealth.com Contact: 022 40192900
WAY2WEALTH Securities Pvt. Ltd.,

15/A Chander Mukhi, Nariman Point, Mumbai - 400 021. Tel: +91 22 4019 2900 email: research@way2wealth.com website: www.way2wealth.com
Way2wealth Research is also available on Bloomberg WTWL <GO>
Initiating Coverage
Cummins India Market Share
CIL - Key power engines Cummins India Ltd. has four strategic business segments viz, engines, power generation, components & distribution business.
Engine business (60-2700HP) Automotive Industrial (Construction, Mining, Compressors, Pumps, Marine, Rail, Oil & Gas, Defense) Recon Power Generation business (15-2000 KVA) Generators Alternators Filtration Exhaust & Emission Solutions Turbo chargers Lubricants (1 PDC/5 zonal offices/ 21 area offices/ 212 dealer sites)
Component business
Distribution business
The engines are normally classified as high horse power (>450 KVA), mid range & low horse power engines (<200KVA). CIL has a capacity of 20-25 engines per year for its High horse power range. For its mid range, it has a primary production capacity of 2 lac engines per year which is manufactured through its JV Tata Cummins Ltd. off which 20000 engines are routed through CILs legal entity. Power generators have a manufacturing capacity of close to 15000 generators per year. Overall its capacity utilization rate is close to 80-85% for FY11. CILs product mix for the respective ranges comprises: <200KVA 10% 200-300KVA - 15% 400-450 KVA 10% >450 KVA 40-45% Total revenues for FY11 has grown by 39% & for FY12 a strong growth of 24% (on a higher base) is expected on account of strong domestic market, pick up in the international markets, increased outsourcing from Cummins Inc. & better pricing of its products (realizations per unit have improved by 1%). Geographically, Exports have always contributed a major chunk of its revenues as increased outsourcing from the parent company has been witnessed by CIL due to encouraging & favourable scenario in the international markets. For FY09, the mix has been 60:40, but was affected badly in FY10 due to global economic slump which has gradually picked up in FY11. For FY11, the mix has been 75:25 & going forward we expect the mix to be slightly tilted towards the domestic market due to favorable conditions.
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Initiating Coverage
Geographical business revenues

80000 70000 60000
Rs. Mns
Geographical Revenues
38.7% 59336 23.6% 48772 39454 21.7%

70% 71%
69912
50.0% 40.0% 30.0% 20.0% 10.0%
50000 40000 30000 20000 10000 0 2008-09

60% 40%
17.8%
33043
83%
71%
28449
74% 29% 30% 29%
0.0% -10.0% -20.0%
-13.9%
17%
26%
2009-10 Domestic (Rs Mns)
2010-11 Exports
2011-12E Total
2012-13E Total % Growth
2013-14E
Source:Way2wealth Research, Company
Domestic revenues Revenues on the domestic front are segregated under Powergen unit (PGU), Industrial business unit (IBU), Auto business unit (ABU), Distribution business unit (DBU) & spares unit. Power scarcity will fuel demand for diesel engines which will continue to be strong. Demand for industrial engines, auto-engines and services over the next couple of years are also expected to stay strong. We expect domestic demand to grow by 25-20% from FY12-14E.
60000 50000 40000 30000 20000 10000 0
Domestic Growth
25.0%
25.9% 23.4% 18.7%
30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%
18.3%
54,304 45,764 37,072 19914 23565 29,454
2008-09
2009-10
2010-11 2011-12E 2012-13E 2013-14E Dom % Growth

Source: Way2wealth Research, Company
Domestic (Rs Mns)

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Initiating Coverage
Segment wise Breakup of Domestic revenues

40% 35% 30% 30% 25% 25% 20% 15% 10% 5% 3% 0% 2008-09 2009-10 2010-11 Powergen Industrial 2011-12E Auto DBU
Segment wise domestic revenues Breakup

37% 35% 35% 36% 36%
24%
22% 19% 16% 11% 9% 6% 2012-13E 9% 8% 15% 15% 15% 15% 15%
23%
7%
2013-14E
Powergen Business Unit Powergen has been the highest contributor to the overall domestic revenues comprising 35% in FY11 & we expect it to stay the same on account of higher demand for gensets for the ever starving power sector. Peak power deficit in India for the year FY10 stood at 12.7% whereas for FY11 the peak deficit is expected to be 10.2%. With this, the demand for power gensets is expected to be very strong in the Indian market.
18.00% 16.00%
Indian Power deficit 16.60%

13.80% 12.20% 12.30% 12.70% 10.20% 11.10% 8.80% 7.10% 7.30% 9.60% 9.90% 8.40% 10.10% 8.80%
14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%
11.20% 11.70%
11.90%
2003
2004
2005
2006
2007
2008
2009
2010
2011
Peak Deficit
Energy Req Deficit

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Initiating Coverage
Source: Way2wealth Research
Diesel Generator Set Market vis--vis Cummins market share According to Frost & Sullivan, the total market size of diesel generation (DG) sets (15-kVA-2,000kVA range) pegged at 153305 units in India stood at INR65.5bn in FY10. Cummins had an overall revenue share of 33.9%, but a much higher 53.6% share in the 375-2,000kVA range (30% of category) while 24.8% share in the 15-375KVA segment. The study estimates the market size to grow at a 10.3% CAGR over FY10-15F, which will increase the penetration of DG sets. Despite the lower usage in developed markets, penetration of DG sets is much higher than that in India as it is a critical back-up power system. The Medium Horsepower generator set rated from 375KVA to 750KVA pegged at 5220 units with overall revenue of 12744 mn is expected to grow at CAGR of 6.2% from FY2010 to 2015. The High Horsepower generator set rated from 750 KVA to 2000 KVA is expected pegged at 1035 units with overall revenue of 7897 mn is expected to grow at CAGR of 9.8% from FY2010 to 2015.

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Initiating Coverage
Source: Way2wealth Research, Powerica DRHP
Market share of DG Sets in India
Diesel Generator Set Market (FY10) KVA Range MHP-375.1-750 HHP-750.1-2000 Total Units 5220 1035 6255 % share 83% 17% 100% Revenues (Rs Mn) 12744.5 7897.85 20642.35 % share 62% 38% 100%
Cummins Market share in the respective segment

Rating wise market Estimation in FY10 KVA Range 15KVA - 2000KVA 375-750 KVA 750-2000KVA Market size Cummins % share Revenues (Rs Mn) Cummins % share 153305 5220 1035 14.7% 50.8% 56.0% 66527 12745 7898 33.9% 53.4% 54.1%
Cummins has recently entered the below 200KVA range & has been selected by its parent as the sole base to manufacture power generating sets below 200 kilovoltampere capacity.
End User Market breakUp for MHP & HHP DG Sets in FY10 Units IT/ITES Healthcare Large Industries Others Total 1376 1026 2020 1833 6255 % share 22.0% 16.4% 32.3% 29.3% 100.0% Revenue (INR MN) 6461 2374 6647 5160 20642 % share 31.3% 11.5% 32.2% 25.0% 100.0%
Key demand drivers Power deficit in peak demand, investments in industrial projects, investments in large infrastructure projects, growth in commercial & residential real estate & back up power for critical facilities will drive demand for diesel gensets in India.

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Initiating Coverage
Engines: Key growth numbers Production of engines is expected to grow by 5.2% in 2011-12 & by 4.8% in 2012-13. This will be driven by industrial & the automotive segment of industry. Industrial Business Unit Construction, mining, compressors, oilfields, marine, defense, railways and water-well rigs are key segments of industrial engines usage. Infrastructure investment will create a strong demand from construction and mining industries. The construction & power sector are expected to grow by 11-18% in next 2 years. Consequently demand for engines is expected to rise by 4-5% growth in terms of production. India stage-III emission norms based on EU stage-IIIA effective from April 2011 on off-highway wheeled construction equipment, will provide additional growth opportunity to CIL, as the company offers both mechanical and electronic engines, meeting emission norms. Automotive Business Unit The demand for automotive segment comes mainly from commercial vehicle and tractor industries. CIL supplies auto components to many leading heavy commercial vehicle manufacturers including Ashok Leyland, Tata Motors VolvoEicher Commercial Vehicles and more. The production of commercial vehicles is expected to grow by 9-12 per cent in 2011-13. During the same period, the output of tractors too is expected to rise by 8-15 per cent. Cummins Sales & Services (CSS) The CSS division replaces, repowers and reconditions old engines. The segment has maintained a growth of over 15% in the past years and is expected to grow on similar lines in the next few years. Rise in the demand for engines will provide more scope for incremental revenues for this segment.
Capex planned by CIL Cummins and several other global automobile and auto parts makers are expanding their existing facilities to tap into this growing market and also to export vehicles and components worldwide as production costs in the South Asian nation are relatively lower than those in Western Europe and the U.S. Cummins India has been selected by its parent as the sole base to manufacture power generating sets below 200 kilovolt-ampere capacity. It plans to spend 300-

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Initiating Coverage
400 crs in FY12 for its manufacturing facility at Phaltan. Four plants at Phaltan will start in FY12 and another six by 2014. The investment will boost capacity by 20% CAGR over the next five years. Funding will be done from internal accruals. The manufacturing facility located on a land bank of 300 acre in Maharashtra would support future capacity requirements for its auto components as well as power generation businesses for the next five years. The four units coming up includes o An engine manufacturing unit that would cater the high horsepower vehicles with 9 to 15 liter engine capacity, o o o A re-conditioning facility, A unit that would function as parts supply distribution centre and The fourth unit for setting up generators for power generation.
It also has plans to make new products such as turbochargers, alternators, new fuel systems and also developing larger engines of 350-400 horsepower. They have been developed and are sold in other parts of the world.
These engines would fit the Prima range of trucks made by Tata Motors Ltd. as Tata Motors & Cummins have an equal joint venture to make engines for medium and heavy commercial vehicles. These new products are likely to contribute 30% of Cummins India's revenue in the next three years.
Upcoming Projects by various other players in Engines ABG Shipyard Ltd has an upcoming diesel engine project at Dahej, Bharuch entailing a total cost of Rs.3940mn, to be completed by 2011. Greaves Cotton to spend Rs.1000mn for its Aurangabad engine manufacturing plant unit which will have a capacity of 80000 units in 2011. General Motors India to have a capacity of 160000 units in Phase I & another 140000 units in Phase II at its Talegaon plant with a total cost of Rs.10450mn by 2012. Kirloskar Industries Ltd is spending worth Rs.1000mn for expansion & upgradation of its DV series of engines from 120-800 HP by 2012. Maruti Suzuki India Ltd. to expand its capacity for K-series engines by 250000 units by incurring a capex worth Rs.12500mn at its Gurgaon plant by 2012.
Source: Way2wealth Research, Industry Data

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Initiating Coverage
Exports set to double with Cummins Inc support
18000 16000 14000 12000 10000 8000 6000 4000 2000 0
Exports Growth
110.0% 13129 11700 10000 17.0% 4883 13572
120.0% 15608 100.0% 80.0% 60.0% 40.0% 20.0% 16.0% 15.0% 0.0% -20.0% -40.0% -60.0%
-62.8% 2008-09 2009-10 2010-11 Exports 2011-12E 2012-13E 2013-14E
-80.0%
Exports % Growth
CIL is expected to double its annual exports to its U.S.-based parent to $1 billion in five years' time, as Cummins Inc seeks to capitalize on India's low-cost, highquality manufacturing skills.
Cummins Inc has decided to source lower than 200kVA diesel gensets from Cummins India for its global requirements. The company will be setting up a factory at its Phaltan mega-site in Pune, where it will make the product. The eventual capacity at the facility will be 40,000 units by FY13. The unit, which will be commissioned by H1FY12, will have an initial capacity of 15,000 units. This will boost exports.
Consequently FY12 exports are likely to cross the Rs11b mark and they are likely to be approx 15bn by FY14. Demand in Asia and Latin America is expected to be strong and a revival in the US and Europe is expected to boost exports.
CIL is also focusing on export of large engines of HHP and these would be of 38liters, 50 liters & 60 liters type of engines. Manufacturing currently takes places at its Kothrud location but the Management has indicated of putting an investment at the Phaltan Megasite.

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Initiating Coverage
Cummins Inc Performance targets for the next 5 yrs: Management Guidance
Continuous Endeavor to add product line Cummins Inc has been continuously adding products to its line of business to make it more diversified offering a range of products & services to boost its revenues.
Increasing
Value
Addition
to
products:
Complimentary
businesses
share
technology, customers & service channel
Cummins Inc expects a CAGR growth of 17% from the Indian market with a well justified growth in the domestic industry spanning across all segments viz power, industrial, auto, spares & components as well as export oriented growth from increased outsourcing & from other Asian & American countries.

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Initiating Coverage
Robust Growth in Emerging Markets: India
Revenue Growth We expect revenue growth to be very strong across all product segments & estimate a growth of 24%, 22% & 18% in FY12E, FY13E & FY14E respectively. Growth will be contributed from increased capacity from its Phaltan site, outsourcing of <200KVA category from the parent company, from higher exports & also from its reconditioning & servicing department.
Operating Margins Cummins India's margins have been impacted by a change in volumes, product mix and a rise in input costs and pricing action taken by the company. Despite a sharp jump in pig iron prices, CIL expects to maintain its operating margins (21% in FY11E) aided by strong volume growth, price action, a superior product mix and aggressive cost cutting programs like TRIMS & ACE to maintain its margins.
Valuations A strong balance sheet, with zero debt & a strong working capital cycle with ROCE of close to 38% apart from bullish fundamental growth across its segments, prompts us to give a BUY Rating on the stock, with a price target of Rs. 779 per share based on its PE of 18x FY13E EPS of Rs. 43 per share. At the CMP of Rs 667, the stock quotes a PE of 15x and 13x its FY13E and FY14E EPS of Rs 43 and 51 per share respectively.

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Initiating Coverage
Peer Comparison
Name of company Cummins Greaves Cotton Swaraj Engines KOEL
CMP 667 84 128
FV
Net Sales
EBIDTA %
PAT %
EPS 29.8 6.6 35.4 12.0 36.3 7.9 40.5 14.0 43.3 9.4 47 22.6 17.5 13.6 15.1 22.9 12.7 11.6 10.7
PE 18.4 10.6 10.1 9.1 15.4 8.9 8.7
FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E FY10 FY11E FY12E FY13E 4.8 8.5
2 28449 39454 48772 59336 22.8% 21.3% 21.3% 20.8% 15.6% 15.0% 14.7% 14.4% 22.4 2 13923 12789 19606 23270 15.4% 15.6% 16.6% 16.6% 8.4% 9.4% 9.8% 9.8% 2 22184 25230 28114 16.3% 13.8% 13.9% 7.4% 6.9% 7.2%
409 10 2824 3585 4251 4923 17.6% 16.3% 16.1% 16.2% 13.2% 12.2% 11.8% 11.8% 30.1

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Initiating Coverage
Financial Summary
Profit & Loss a/c Statement Particulars (Rs. Mln) Net Sales Other Income Total Income % Growth EXPENDITURE : Raw Materials Manufacturing Expenses Total Expenditure % of Sales Operating Profit EBIDTA Margins % Depreciation EBIT EBIT Margins % Interest PBT & Extraord. Items EBT Margins % Exceptional Items PBT but after Ext. Items Total Tax Profit After Tax PAT Margins % 18358 4816 23174 81.5% 6490 22.8% 361 6130 21.5% 21 6109 21.5% 0 6109 1670 4439 15.6% 26286 6533 32820 83.2% 8409 21.3% 366 8042 20.4% 19 8023 20.3% 0 8023 2114 5909 15.0% 32393 8177 40570 83.2% 10396 21.3% 611 9786 20.1% 20 9766 20.0% 0 9766 2573 7193 14.7% 39343 10037 49381 83.2% 12329 20.8% 672 11657 19.6% 21 11636 19.6% 0 11636 3066 8570 14.4% 46289 11896 58185 83.2% 14523 20.8% 725 13798 19.7% 22 13776 19.7% 0 13776 3630 10146 14.5% 2009-10 28449 1216 29664 -14.1% 2010-11 2011-12E 2012-13E 2013-14E 39454 1774 41228 39.0% 48772 2195 50967 23.6% 59336 2373 61709 21.1% 69912 2796 72708 17.8%
Balance Sheet Particulars (Rs. Mln) SOURCES OF FUNDS : Equity capital Total Reserves Total Networth Debt Capital Deferred Tax liability Total Liabilities APPLICATION OF FUNDS : Gross Block Less : Accumulated Depreciation Net Block Goodwill Investments Deferred Tax Assets Current Assets Inventories Sundry Debtors Cash and Bank Loans and Advances Other Current assets Current Liabilities Sundry Creditors Other Creditors Provisions Net Current Assets Total Assets 7776 4440 3337 0 7329 170 12673 4097 5229 559 2695 93 7812 3768 1409 2634 4861 15696 9217 4806 4411 0 7255 187 16804 5190 7182 1037 3297 99 10412 5226 1883 3304 6392 18245 13272 5417 7856 0 7255 187 19629 6340 8779 506 3902 102 12950 6460 2439 4051 6679 21977 14600 6088 8512 0 7255 187 26758 7714 10680 3507 4747 110 15618 7859 2967 4792 11140 27093 15768 6813 8954 0 7255 187 35678 9089 12584 8298 5593 115 18288 9260 3496 5533 17390 33786 396 15214 15610 86 0 15696 396 17666 18062 183 0 18245 396 21389 21785 192 0 21977 396 26496 26892 201 0 27093 396 33179 33575 211 0 33786 2009-10 2010-11 2011-12E 2012-13E 2013-14E
Cash Flow Particulars Cash Flow from Operating Act. Op. Profit before Working Capital Changes in Trade & other Receivables Inventories Trade Payables Loans & Advances Other Current Assets Provisions Cash Generated from operations Direct Taxes Paid Net Cash flow from Operating Act. Cash Flow from Investing Act. Capex Purch/Sale of Fixed Assets Purch/Sale of Invsts Interest Recd. Div recd. Advances to subsidiaries Net Cash used in Investing act Cash Flow from Financing act. Bnak Overdraft Loans repaid Dividend Paid Interest paid Finance Lease Liability Net Cash from Financing act Total ( a+b+c) Opening balance for cash & cash eq. Closing balance for cash & cash eq. -126 0 -1992 -21 -17 -2155 236 326 562 0 0 -3463 -19 0 -3482 475 562 1037 0 0 -3463 -20 0 -3483 -531 1037 506 0 0 -3463 -21 0 -3484 3001 506 3507 0 0 -3463 -22 0 -3485 4791 3507 8298 0 -618 -3340 23 567 -5 -3368 -1441 0 75 25 725 0 -615 -4055 0 0 25 725 0 -3305 -1327 0 0 25 725 0 -577 -1168 0 0 25 725 0 -417 1568 583 -780 -53 -1 120 7309 -1549 5759 -1953 -1093 1931 -602 -6 0 6686 -2114 4572 -1597 -1151 1790 -605 -4 0 8830 -2573 6257 -1901 -1373 1927 -845 -8 0 10128 -3066 7062 -1904 -1375 1930 -846 -5 0 12323 -3630 8693 5872 8409 10396 12329 14523 2009-10 2010-11 2011-12E 2012-13E 2013-14E
Ratios Particulars Valuation Ratios Mkt.Price - Rs. EPS - Rs. EBIDTA % PBT % PAT % EV - Rs. Mln. EV/EBIDTA EV/Sales Book Value in Rs.per share P/E ratio ROCE - % ROE - % Dividend Yield Balance Sheet Ratios Debt-Equity Ratio Current Ratio Debtor Days Creditor Days Depreciation / GFA Interest Cover Ratio Turnover Ratios Fixed Assets Inventory Debtors 3.7 6.9 5.8 4.3 7.6 5.8 3.7 7.7 5.9 4.1 7.7 5.9 4.4 7.7 5.9 0.01 1.6 60 43 4.6% 298.9 0.01 1.6 60 43 4.0% 423.3 0.01 1.5 59 43 4.6% 490.5 0.01 1.7 59 43 4.6% 556.5 0.01 2.0 59 43 4.6% 627.3 506.00 22.4 22.8% 21.5% 15.6% 99715 15.4 3.5 78.8 22.6 33.8% 28.4% 2.4% 684.00 29.8 21.3% 20.3% 15.0% 134577 16.0 3.4 91.2 22.9 37.7% 32.7% 2.2% 667.00 36.3 21.3% 20.0% 14.7% 135118 13.0 2.8 110.0 18.4 37.9% 33.0% 2.2% 43.3 20.8% 19.6% 14.4% 132126 10.7 2.2 135.8 15.4 36.8% 31.9% 2.2% 51.2 20.8% 19.7% 14.5% 127346 8.8 1.8 169.6 13.0 35.3% 30.2% 2.2% 2009-10 2010-11 2011-12E 2012-13E 2013-14E

Page 13 of 16
Initiating Coverage
Appendix
Cummins in India since 1962
Cummins Product family

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Initiating Coverage
RESEARCH TEAM RESEARCH TEAM

K.N.Rahaman Jigisha Jaini Nisha Harchekar Sejal Jhunjhunwala Abhishek Kothari Krishna Reddy MSR Prasad Ritu Gupta Aditya Agarwal Arun Kumar Contact Deputy Research Head Sr. Research Analyst Sr. Research Analyst Sr. Research Analyst Research Analyst Research Analyst Research Analyst Research Analyst Sr. Derivative Analyst Technical Analyst Equities & Commodities Capital Goods & Engineering FMCG, Hotels, Media Auto, Shipping & Metals Banking, NBFC & Financial Services Commodities, Economic Update Commodities Mutual Funds Derivative Strategist & Technicals Technical Analysis - Commodities rahaman@way2wealth.com jigishajaini@way2wealth.com nishaharchekar@way2wealth.com sejal@way2wealth.com abhishekkothari@way2wealth.com krishnareddy@way2wealth.com Prasad.m@way2wealth.com ritugupta@way2wealth.com aditya@way2wealth.com Arun.Kumar @way2wealth.com
022-40192900

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Initiating Coverage
DISCLAIMER
Analyst Certification: I, Jigisha Jaini, the research analyst and author of this report, hereby certify that the views expressed in this research report accurately reflect our personal views about the subject securities, issuers, products, sectors or industries. It is also certified that no part of the compensation of the analyst(s) was, is, or will be directly or indirectly related to the inclusion of specific recommendations or views in this research. The analyst(s), principally responsible for the preparation of this research report, receives compensation based on overall revenues of the company (Way2Wealth Brokers Private Limited, hereinafter referred to as Way2Wealth) and has taken reasonable care to achieve and maintain independence and objectivity in making any recommendations. Disclaimer This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Way2Wealth is not soliciting any action based upon it. Nothing in this research shall be construed as a solicitation to buy or sell any security or product, or to engage in or refrain from engaging in any such transaction. The contents of this material are general and are neither comprehensive nor appropriate for every individual and are solely for the informational purposes of the readers. This material does not take into account the specific objectives, financial situation or needs of an individual/s or a Corporate/s or any entity/s. This research has been prepared for the general use of the clients of the Way2Wealth and must not be copied, either in whole or in part, or distributed or redistributed to any other person in any form. If you are not the intended recipient you must not use or disclose the information in this research in any way. Though disseminated to all the customers simultaneously, not all customers may receive this report at the same time. 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"Fuelling" Engines : Initiating Coverage

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Cummins India Ltd.

18492 5545 810/548 132125 2

51.00 20.96 11.70 6.59 9.75

Comparative Price Movement

Net Sales % Growth PAT EBIDTA % PAT % EPS PE ROCE % ROE %

28449 -14% 4439 21.5% 15.6% 22.4 22.6 34% 28%

39454 39% 5909 20.4% 15.0% 29.8 22.9 38% 33%

48772 24% 7193 20.1% 14.7% 36.3 18.4 38% 33%

59336 22% 8570 19.6% 14.4% 43.3 15.4 37% 32%

Sr. Analyst : Jigisha Jaini Email: jigishajaini@way2wealth.com Contact: 022 40192900

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Cummins India Market Share

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Geographical business revenues

38.7% 59336 23.6% 48772 39454 21.7%

50.0% 40.0% 30.0% 20.0% 10.0%

50000 40000 30000 20000 10000 0 2008-09

74% 29% 30% 29%

0.0% -10.0% -20.0%

2009-10 Domestic (Rs Mns)

2012-13E Total % Growth

Source:Way2wealth Research, Company

60000 50000 40000 30000 20000 10000 0

25.9% 23.4% 18.7%

30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0%

54,304 45,764 37,072 19914 23565 29,454

2010-11 2011-12E 2012-13E 2013-14E Dom % Growth

Domestic (Rs Mns)

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Segment wise Breakup of Domestic revenues

Segment wise domestic revenues Breakup

Indian Power deficit 16.60%

14.00% 12.00% 10.00% 8.00% 6.00% 4.00% 2.00% 0.00%

Energy Req Deficit

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Source: Way2wealth Research

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Source: Way2wealth Research, Powerica DRHP

Market share of DG Sets in India

Cummins Market share in the respective segment

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Exports set to double with Cummins Inc support

18000 16000 14000 12000 10000 8000 6000 4000 2000 0

-62.8% 2008-09 2009-10 2010-11 Exports 2011-12E 2012-13E 2013-14E

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technology, customers & service channel

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Robust Growth in Emerging Markets: India

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