Competitive overhang clouds Cummins India's medium-growth outlook

At the current price, the stock is trading at 30x its FY23 earnings estimates

The stock of Cummins India, which makes diesel and natural gas engines, was up 6 per cent since its lows last month after a better-than-expected December quarter performance. A record showing in the quarter led to upward revisions in the earnings estimates of 6-11 per cent for 2021-22 (FY22) and FY23.  

Revenues in the quarter for the capital goods major was up 22 per cent over the year-ago quarter. This was led by a 23 per cent uptick in the domestic business and 18 per cent growth in exports. The realisations in exports, which accounted for 26 per cent of revenues,