Equity Research on Cummins india

1. Assignment on Equity Research
Submitted by
Name : Ravi Ranjan
MBA-Finance (60)
Subject: Equity Research
Co. Name: Cummins India
Submitted to:
Dr. Purvi Shah

2. 1. Pestle and Swot Analysis of Cummins
Pestle analysis of Cummins
Political Factors that Impact Cummins Inc.
Political factors play a significant role in determining the factors that can impact Cummins
Inc.'s long term profitability in a certain country or market.
 Political stability and importance of Diversified Machinery sector in the country's
economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Industrial Goods sector.
 Bureaucracy and interference in Diversified Machinery industry by government.
Legal framework for contract enforcement.
 Intellectual property protection.
Economic Factors that Impact Cummins Inc.
The Macro environment factors such as – inflation rate, savings rate, interest rate, foreign
exchange rate and economic cycle determine the aggregate demand and aggregate investment
in an economy.
 Type of economic system in countries of operation – what type of economic system
there is and how stable it is.
 Government intervention in the free market and related Industrial Goods
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does Cummins Inc. needs to raise capital in local
market?
 Infrastructure quality in Diversified Machinery industry.
Social Factors that Impact Cummins Inc.
society’s culture and way of doing things impact the culture of an organization in an
environment. Shared beliefs and attitudes of the population play a great role in how marketers
at Cummins Inc.
 Demographics and skill level of the population
 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Cummins Inc. ’s industry
 Culture (gender roles, social conventions etc.)
Technological Factors that Impact Cummins Inc.
Technology is fast disrupting various industries across the board. Transportation industry is a
good case to illustrate this point. Over the last 5 years the industry has been transforming
really fast, not even giving chance to the established players to cope with the changes.
 Recent technological developments by Cummins Inc. competitors

3.  Technology's impact on product offering
 Impact on cost structure in Diversified Machinery industry
 Impact on value chain structure in Industrial Goods sector
Environmental Factors that Impact Cummins Inc.
Different markets have different norms or environmental standards which can impact the
profitability of an organization in those markets.
 Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Diversified Machinery industry
 Recycling
Legal Factors that Impact Cummins Inc.
In number of countries, the legal framework and institutions are not robust enough to protect
the intellectual property rights of an organization.
 Anti-trust law in Diversified Machinery industry and overall in the country.
 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
Swot Analysis of Cummins
Strengths
1. Leading manufacturer of Diesel Engines
2. Consistent top line growth
3. Strong R&D facility and product pipeline
4.Also has entered into related businesses like filters, turbochargers, batteries etc
5. Significant presence in many developing countries
Weaknesses
1.Heavy dependence on few suppliers
2. Tough competition means limited market share
Opportunities
1.Opportunities in the Asian market
2.Rise in the demand for Diesel engines worldwide
3. Strategic joint ventures with Fluid companies, OEM’s etc. could pave the way for
independent business units.
Threats

4. 1. Intense competitive pressure
2. Rising labor wages in the U.S.
3. Potential Currency exchange losses
2.Company Profile
Cummins India Limited is a manufacturer of diesel and natural gas engines, generator sets
and related services. The Company operates through two segments: Engines and Lubes. Its
three businesses include Engine Business, Power Systems Business and Distribution
Business. The Engine Business manufactures and markets diesel and natural gas engines
from 65 horsepower (HP) to 500 HP. These engines power heavy and medium-duty trucks,
light-duty trucks and buses, in addition to industrial applications, such as construction and
military equipment. The Power Systems Business designs and manufactures high horsepower
engines for railways, mining and power generation applications. It caters to the power
requirements of a range of individual and institutional customers in various segments, such as
infrastructure and hospitality. The Distribution Business, operating under the brand name
Cummins Sales and Service India (CSS), provides products, services and solutions for uptime
of its equipment.
3. Company Sector ?
Company belongs to Heavy Equipment & Engineering sector.
4. Company Establishment year?
Cummins was founded in 3 February 1919,in Columbus, Indiana.
5. Brief overview of company
A Power Leader Cummins in India designs, manufactures, distributes and services diesel and
alternative fuel engines from 2.8 to 95 liters, diesel and alternative-fueled power generator
sets of up to 3000 kW (3750 kVA), as well as related components and technology.
Part of the US $23.8 billion Cummins Inc., Cummins in India serves customers through our
network of 3 Generator Original Equipment Manufacturers (GOEMs), 22 dealerships and
more than 120 dealership branch offices in India.
6. CEO /MD /VP of the company:
Mark Levett Chairman
Antonio Leitao Non Executive Director
Nasser Munjee Independent Director
P S Dasgupta Independent Director
Venu Srinivasan Independent Director
Lorraine Meyer Non Executive Director
Norbert Nusterer Non Executive Director

5. Donald G Jackson Non Executive Director
Prakash Telang Independent Director
Rajeev Bakshi Independent Director
Anjuly Chib Duggal Independent Director
J M Barrowman Alternate Director
7. Cummins is multinational Company?
Yes Cummins is multinational co. Cummins sells in approximately 190 countries and
territories through a network of more than 600 company-owned and independent distributors
and approximately 6,000 dealers.
8.HeadOffice
Head office : Columbus, Indiana, United States
9. Is it NSE/BSE Listed?
NSE: CUMMINSIND
10. What is their Current share Price?
CUMMINSIND : 563.85
11. How many branches/Unit acrossWorld?
Cummins sells in approximately 190 countries and territories through a network of more than
600 company-owned and independent distributors and approximately 6,000 dealers.
12.How many branches/Unit across India?
The Group operates 20 manufacturing facilities across India.
13.TotalTurnoverin(US $)/ Indian Rupees
Cummins reported net income of $2.19 billion on sales of $23.77 billion in 2018.
14. Products and services offered:
A.Engines
BSIV Engines - Right Technology Matters
On-Highway
Off-Highway
ReCon Engines

6. B.Generators
Diesel Generator Specifications
Gas Generator Specifications
Power Electronics
Alternators
Genset Sales Network
C.Components
Fuel Systems
Turbochargers
Emission Solutions
Filtration
New Product Development:-
The following new Products were developed as part of the above initiatives during the year:-
1. Rail engine product families to support the growing Rail Business;
2. Marine engine product families to support the increasing commercial Marine Business;
3. Further enhancement of the non-diesel product development capability as alternative
fuels are being
explored in India;
4. Telematics capability has been developed to improve uptime and fuel efficiency of our
products;
5. Fit for market 910 kVA Genset node introduced in the market to serve specific
requirement of the
Metro segment; and
6. To enhance position of Cummins in the Low kVA market, your Company has introduced a
new 35 kVA genset
with X2.7 litre engine.
16. MajorCompetitors
1. Honeywell Inc.
2.Deere & Co.
3. Detroit Diesel
4. Caterpillar
17. Customers Segments:
The Engine Segment designs and manufactures state-of-the-art diesel and natural gas
powered engines for on-highway and off-highway use. The business also offers new parts and
remanufactured parts and engines.

7. The Power Systems Segment is a global provider of high-speed high-horsepower engines and
power generation equipment, including standby and prime power generator sets, alternators,
switchgear and other components. Power Systems offers engines, power generation systems,
components and services, and alternative-fuel electrical generators for use in residential
standby, commercial industrial, mining, marine, rail, oil and gas, defense, data centers,
telecom and healthcare applications and industries, among others
The Components Segment consists of four businesses with key technologies for delivering
integrated solutions: Cummins Filtration, Cummins Turbo Technologies, Cummins Emission
Solutions and Cummins Electronics and Fuel Systems. Cummins Filtration designs,
manufactures and distributes heavy-duty air, fuel, hydraulic and lube filtration, chemicals and
exhaust system technology products for diesel and gas-powered equipment. Cummins Turbo
Technologies designs and manufactures turbochargers and related products, on a global scale,
for diesel engines above 3 liters. Cummins Emission Solutions develops and produces
various emission solutions designed to meet the highest emissions standards worldwide.
Cummins Electronics and Fuel Systems consists of two separate product lines. The
electronics product line develops engine control modules and electronics control units,
software, sensors and tools. The fuel system product line designs, develops, manufactures and
remanufactures both unit injector and common rail systems. For more information, visit the
Cummins Fuel Systems page.
The Distribution Segment drives a comprehensive global distribution strategy and channel
management. This business provides sales, service and support to customers around the world
through the largest number of certified service and support locations of any engine
manufacturer.
The Electrified Power Segment brings together all of Cummins’ electrification resources to
increase the visibility of and accountability for the company’s investments and performance
in this growing market. It is positioned to provide fully electric and hybrid powertrain
solutions along with technology leading components and subsystems to serve all markets as
they adopt electrification. Currently in development are the Cummins Battery Electric System
(BES) and the Cummins Power Hybrid Plug-In (HPP) systems for an urban bus, which are
expected to launch in 2019 and 2020, respectively.
18.Brand Endorsement

8. Virat Kohli signs up as brand ambassador for Valvoline Cummins
19. Current News about the company
Cummins Standalone June 2019 Net Sales at Rs 1,343.04 crore, up 1.14% Y-o-Y
Reported Standalone quarterly numbers for Cummins India are:
Net Sales at Rs 1,343.04 crore in June 2019 up 1.14% from Rs. 1,327.95 crore in June
2018.Quarterly Net Profit at Rs. 141.51 crore in June 2019 down 22.67% from Rs. 183.00
crore in June 2018.EBITDA stands at Rs. 228.30 crore in June 2019 down 19.67% from Rs.
284.22 crore in June 2018.Cummins EPS has decreased to Rs. 5.10 in June 2019 from Rs.
6.60 in June 2018.Cummins shares closed at 672.85 on August 06, 2019 (NSE) and has
given -16.01% returns over the last 6 months and -3.35% over the last 12 months.
Cummins India sees many headwinds, says things unlikely to improve over next 2
quarters
Cummins India CFO Rajiv Batra also said, "There are many headwinds, which are impacting
the sectors in which we operate. One is liquidity, second is project approvals. We don’t think
this will get sorted out at least for a quarter to a quarter and a half.”
Cummins India shares fall 5% after Managing Director resigns
Cummins India shares fell 5 percent intraday on July 16 after Sandeep Sinha resigned as
Managing Director of the company.
Sinha also resigned as Vice President of Cummins India ABO, the company in its BSE filing
said, adding the reason for his resignation is to pursue business interests outside of Cummins.
Sinha joined Cummins in 2004 as a Corporate Indirect Purchasing Manager. Over his career
at Cummins, he held several leadership roles in Corporate Strategy in the USA, New &
Recon Parts and Industrial Engine Business in India. Before taking his most recent leadership
role, Sinha served as the Chief Operating Officer of Cummins India.
Cummins India designs, manufactures, distributes, and services engines and related
technologies in India.
20. Job Description
At Cummins Sales and Service our goal is not only total customer loyalty, but complete
employee satisfaction as well. We employ some of the brightest, most talented individuals in
the business. We are concerned with your success as much as we are with the success of our

9. business. We want to ensure that Cummins Sales and Service is a great place to come to
work!
Diversity
We are dedicated to the principles of equal employment and fair hiring practices. We believe
that a diverse workplace promotes a culture of innovation and collaboration and is simply the
responsible and right thing to do. We realize that the success of our company lies in our
people. We embrace a diverse workforce and strive to provide an atmosphere that engages
our employees, builds an awareness of responsibility while drawing on their ingenuity and
empowering them to make a difference at work, at home, and in the community.
Employee Benefits
We offer a broad range of employment opportunities along with competitive compensation,
ongoing training, career development opportunities, excellent benefits, paid time off and
holidays, and a great work environment
20. Ratios
Year 019 018 017 016 015
Quick Ratio 1.82 1.84 1.74 1.87 1.39
Current Ratio 2.23 2.22 2.21 2.54 1.96
Net Profit Margin 11.40 12.24 12.83 13.31 15.40
Return on Assets 12.25 12.45 14.12 15.47 16.78
Return on Networth 17.33 17.28 19.01 19.98 24.99
Return on Capital Employed 21.93 16.71 18.41 19.18 23.38
Debt/Equity 0.07 0.06 0.07 0.00 0.00
Fixed Assets Turnover Ratio 1.99 1.85 2.29 2.42 2.56
Interest Coverage Ratios (%) 59.21 52.66 50.39 82.57 535.10
Inventory Turnover Ratio 9.00 9.39 8.96 7.78 6.64
Debtors Turnover Ratio 4.35 4.51 5.35 4.90 -
Total Assets Turnover Ratio 1.24 1.19 1.24 1.31 1.60
Return On Capital
Employed(%)
21.60 20.07 20.85 22.40 30.28
EPS (Rs.) 26.79 25.68 26.56 26.02 27.8
P/E Ratio 27.82 - - - -
Dividend Yield 2.35 - - - -
Dividend Payout Ratio (%) 63.45 54.51 52.70 53.80 50.26
Price/BV 4.82 4.72 6.79 6.47 7.87

10. During the Financial Year 2018-19, revenue from operations was Rs, 565,900 Lacs as
compared to Rs, 516,106 Lacs during the previous year (9.6% higher). Profit after tax
increased to Rs, 72,257 Lacs from Rs, 70,847 Lacs recorded for the previous year (2.0%
higher).
The paid-up share capital of the Company is Rs, 554,400,000/- divided into 277,200,000
equity shares of Rs, 2/- each as on March 31, 2019. Your Company has not come out with
any issue (public, rights or preferential) during the year.
cummins Generator Technologies India Private Limited (CGT):
Company owns 48.54% shareholding in the Associate Company namely CGT which is in the
business of design, manufacturing, marketing, sales and service of alternators and related
spare parts. CGT generated revenue of Rs, 74,361 Lacs from its operations for the year ended
March 31, 2019, as compared to Rs, 63,807 Lacs during the previous year (16.5% higher).
The unsecured loan given to Cummins Technologies India Private Limited (which is a
subsidiary of Cummins Inc., USA) in 2011 in compliance with the then applicable,
Companies Act, 1956 and Rules there under was fully repaid to the Company during the year,
and no other loan or guarantee was given, or investment was made by your Company during
the Financial Year 2018-19.