Cummins India: Showing Some Strength
Suparna / 11 May 2013
Cummins India has posted better than expected results for the March 2013 quarter. With the capital goods sector expected to pick up, we recommend that investors hold this counter.
Cummins India announced its March 2013 quarter results, notching up a better performance than the street estimates. With the capital goods sector witnessing a sort of recovery after a long period of underperformance in the preceding three quarters, the company’s topline has witnessed a good upmove. Its topline for the March 2013 quarter stood at Rs 1154.28 crore as against Rs 1089.46 crore in December 2012 and Rs 1040.38 crore in March 2012.
However, some amount of pressure on the margins was felt in the quarter. The EBIT for the period stood at Rs 263.85 crore as against Rs 262.97 crore in December 2012 and Rs 207.50 crore in March 2012. As a result the EBIT margins for the March 2013 quarter stood at 22.85% as compared to 24.13% in December 2012 and 19.90% in March 2012, marking a drop on a sequential basis.
At first instance, the company’s net profit for the March 2013 quarter stood at Rs 188.54 crore as against Rs 234.08 crore in December 2012 quarter. However, the December quarter had seen an exceptional item of Rs 47.50 crore, adjusting for which the net profit stood at Rs 186.58 core. The profit has been better on a YoY basis too, up from Rs 144.57 crore in the March 2012 quarter.
For FY13 as a whole, the topline stood at Rs 4589.38 crore as against Rs 4117.22 crore in FY12. Adjusted for the exceptional item for both years, the bottomline for FY13 stood at Rs 702.52 crore as against Rs 539.83 crore in the previous fiscal.
The company has announced a dividend of Rs 8 per share of face value Rs 2. This was in addition to the dividend of Rs 5 announced in January 2013.
The results of the company are good and the scrip trading at 18.93x its FY13 earnings. With the IIP showing some improvement in the capital goods sector, we recommend holding this counter from a long-term perspective.
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