Cummins India shares slumped 5 per cent to Rs 712.5 apiece in intra-day, on the BSE on Tuesday after managing director Sandeep Sinha decided to step down from his managerial position "to pursue business interests outside of Cummins".
"We wish to inform you that Mr. Sandeep Sinha shall cease to be the Managing Director, Director and Key Managerial Personnel of the Company with effect from closing business hours of August 16, 2019," the company said in a BSE filing. READ THE BSE FILING HERE.
At 10:33 am, the stock was quoting at Rs 740 per share, down 1.61 per cent. In comparison, the benchmark S&P BSE Sensex was ruling 0.26 per cent higher while the BSE Auto index was down 0.15 per cent. So far in 2019, the stock has tumbled 11.3 per cent as against a 17 per cent fall in the BSE Auto Index.
According to news reports, foreign brokerage firm Nomura downgraded the stock from 'neutral' to 'reduce' early this month coulped with a cut in the FY20 and FY21 earning per share (EPS) estimate by 6 per cent and 1 per cent respectively on weaker than expected EBITDA margins.
"We value Cummins at a reduced PE of 22.5x (vs 25x) due to weak outlook on FY21 estimated EPS to arrive at a target price of Rs 700, -10 per cent downside and downgrade to reduce from neutral," a note by Nomura read.
The research firm has cut price target to Rs 700 from Rs 765 per share, implying 9 percent downside from current levels.