Cummins is confident on the near-term (2H) growth outlook. It pointed out that the growth rate can moderate after that as base effect comes into play. Export, one of the key drivers of sales, has again picked up and is currently at 85% of the earlier peak. Management highlighted that export sales should reach the earlier peak by FY12, in line with our expectations.
Management highlighted its high HP engine capacity expansion plan (from 19 to 25 engines/day on a five day per week basis, to be completed this calendar year only) and pointed out that its additional capacity expansion for medium HP engines should be completed in 1Q CY11, in line with the expectations. Management guided for flat margins going forward, in line with our expectations, and with no changes in royalty in the near future.
FY11 and FY12 EPS is expected to be Rs 31 and Rs 43
