Cummins India Ltd.’s share price fell over 5% on Friday after Goldman Sachs downgraded the stock to ‘sell’, saying incremental market share gains will be at the expense of profitability.
The brokerage has a target price of Rs 2,900 per share, implying a 23% downside.
The transition to CPCB-IV has made diesel gen-sets more expensive by 15-25%, Goldman Sachs said in a note. Further, with competitors introducing more SKUs in high Kilo-volt-amperes gen-sets, the brokerage expects incremental market share gains to be at the expense of profitability.
The overall demand will reduce in the medium-to-long term with falling battery costs, the brokerage said.
Goldman Sach sees export growth rates lower versus the previous upcycle on stringent emission norms. The brokerage’s downgrades are due to near-term margins coming under pressure and medium-term growth moderating, it said.
