Motilal Oswal reiterated its ‘Buy’ rating on Cummins India as it sees the company as a key beneficiary of strong data centre growth. However, the brokerage house revised the target price slightly downward to Rs 6,400 from Rs 6,500 to factor in near-term pressure on operating margins. This implies an upside of 23% from the current market price.
Surging datacenter-led powergen growth
Cummins India is a preferred player in the rapidly growing data centre space. It meets colocation-based data centre needs with locally produced QSK60 engines and supplies 2MW/3MW requirements to hyperscalers with QSK78/95 engines imported from its parent entity. Driven by this high-margin, data centre-led demand, Motilal Oswal estimates a 19% revenue CAGR for the powergen segment over FY26–29.
Industrial segment diversification
Although construction activity and compressors are currently experiencing a slow, monsoon-dependent down cycle, strong demand in other areas — such as railways, mining, defence, and marine — is successfully offsetting the weakness.
Backed by complex projects like shipyard marine propulsion and OEM mining orders, the industrial segment is expected to achieve a 12% CAGR over FY26–29.
High-margin distribution and new energy opportunities
The distribution segment is poised to grow at a 21% CAGR over FY26–29. Growth is driven by a massive and growing installed base, spare parts, telematics, and customised services. Additionally, the launch of Battery Energy Storage System (BESS) solutions in FY26 positions the company to capture opportunities in renewable integration and grid resilience.
Resilient export outlook in Europe and Asia-Pacific
Despite volatility in the Middle East market, overall export revenues are expected to register a 16% CAGR over FY26–29. Growth is led by strong demand for High-Horsepower (HHP) systems in Europe, Latin America, and the Asia-Pacific regions, with the company already aligning its product lineup to meet evolving global emission standards like Euro 6.
Proactive price hikes to protect margins
Margins faced soft performance in Q1 FY27 due to commodity cost spikes, but the company took a price hike in July 2026 to pass on these raw material pressures. The company’s management is continuously evaluating commodity costs for additional pricing actions to defend its long-term target EBITDA margin range of 20–21%.
Cummins India share price performance
The share price of Cummins India has fallen 1.5% in the last five trading sessions. The stock has dropped 7.7% in the past one month. However, the stock has surged 4.7% in the last six months. Cummins India’s share price has given a return of 35.4% over the previous 12 months.