| Date: |
07-08-2015 |
| Subject: |
Cummins India Q1 adjusted profit seen up 29% to Rs 167 cr |
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Cummins India's first quarter adjusted net profit is seen rising 29.1 percent year-on-year to Rs 167 crore, according to a CNBC-TV18 poll. In the year-ago period, the company had an extraordinary gains of Rs 82.6 crore. The reported profit after tax is expected to fall 21.2 percent during the same period.
Revenue is likely to increase 11.9 percent to Rs 1,169 crore compared to Rs 1,045 crore in the corresponding quarter of last fiscal, led by 15 percent higher pricing on a Y-o-Y basis due to CPCB II norms (this is only for one of the product lines for the company).
Revenue growth may also be led by continued momentum seen in exports segment growth (especially in low HP gensets). Exports constituted 40 percent of company’s sales in March quarter. Analysts see almost 25 percent growth in exports.
However, power gensets (around 23 percent of sales) could see continued softness while domestic demand remained constrained, given the weak macro environment and lower power deficit, they added.
Operating profit (earnings before interest, tax, depreciation and amortisation) may grow 7.8 percent year-on-year to Rs 194 crore but margin may decline 60 basis points to 16.6 percent in first quarter of FY16.
The fall in margin may be on account of increased import content in CPCB II compliant engines, price cut or price roll back which the company has taken to regain its market share & has been successful in the same and increase in the competitive intensity in the domestic market.
With higher exports or sales from its Phaltan SEZ, analysts expect lower effective tax rates for the quarter. Cummins may report a lower other income on a high base of last year.
Key factors to watch out for would be its market share and commentary on demand outlook & traction in domestic business.
Cummins is almost a consensus buy among analysts, given the strong industrial potential due to continued power shortage and likely recovery in capex cycle, strong outlook on exports, strong balance sheet, technological capability and improvement in market position, post changes in emission norms.
Source : moneycontrol.com
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