Cummins India falls 3% after Nomura downgrades, cuts price target

Nomura feels street estimates have been optimistic and sees risks of further cuts

Cummins India shares fell 2.7 percent intraday on July 4 after Japanese brokerage house Nomura downgraded the stock to reduce from neutral.


The research firm also cut price target to Rs 700 from Rs 765 per share, implying 9 percent downside from current levels.

"FY20 is likely to be a weak year. Margin and pricing headwinds are going to persist," Nomura reasoned.

The brokerage cut FY20/21 EPS estimates by 6 percent/1 percent on weaker-than-earlier-estimated margin.

Nomura feels street estimates have been optimistic and sees risks of further cuts. "Recent product Launches by peers and aggressive pricing may hinder margin recovery."

Current price is building in 16 percent decadal EPS CAGR and 23 percent return on equity, Nomura said.

The stock was quoting at Rs 749.90, down Rs 18.40, or 2.39 percent on the BSE at 0943 hours IST.

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