After a 100% gain in a year, Cummins India's shares plunge significantly due to its cautious outlook

According to Cummins India, material margins would be under a lot of pressure going ahead.

Macquarie has set a target price of Rs 3,600 per share for Cummins India shares, with a rating of "outperform."

During the May 30 results call, Cummins India informed investors that sustaining gross margins is becoming difficult due to the significant increase in global metal prices. That same day, the company's share price dropped as much as 6% due to cautious management remarks.

It should be mentioned that within the last 12 months, Cummins India's stock has seen an incredible 105 percent increase, more than doubling investors' capital.

The maker of natural gas and diesel engines said that moving ahead, material margins would be under a lot more pressure.

The management's gloomy prognosis comes after a robust earnings announcement for the quarter that concluded in March 2024. In Q4FY24, Cummins India reported a 50% year-over-year increase in consolidated net profit of Rs 530.5, bolstered by strong demand in both local and foreign markets. Revenue for Cummins India was Rs 2,319 crore, up 19.9% year over year, the company said in an exchange filing.

Nonetheless, Macquarie continues to have a positive view on the company, maintaining a "Outperform" rating and a target price of Rs 3,600 per share. According to Macquarie, the firm had a solid year-end performance in terms of its domestic business growth, excellent margin expansion, and decreased other expenditures despite the continued slowdown in exports.

Nomura has kept its call on the stock at "Neutral," with a target price of Rs 3,040. According to the report, the diesel engine manufacturer surpassed its own projections by 51% on the PAT.

In addition, the EBITDA margin for the quarter, which was 23.5 percent, surprised analysts by showing stronger growth in the High Horsepower (HHP) category, pricing power retention, and pig iron price correction.

In addition to the interim dividend of Rs 18 per share announced on February 7, 2024, the board of Cummins India additionally authorized an interim payment of Rs 20 (1,000 percent) per equity share on 27 crore fully paid-up equity shares with a face value of Rs 2 each for FY24.

Shares of Cummins India were down over 5.5 percent at Rs 3,624 on the National Stock Exchange (NSE) at 1:25 pm. The stock has increased by more than 80% so far this year, far outpacing the Nifty's gains of 3.8 percent during this time.