Cummins India Ltd was incorporated on 17th February 1962, at Pune. The Company manufacture internal combustion engines in particular diesel engines of all sizes and capacities, reciprocating piston engines, gas turbine engines, gasoline engines, etc. The promoters of the Company were Kirloskar Oil Engines Ltd., Lakshmanrao Kirloskar Road, Khadki, Pune and Cummins Company Inc., Columbus, U. S. A. Its Subsidiary, Cummins Diesel Sales and Service, was engaged in providing after-sales service and spare parts for the entire range of Cummins products through a nationwide network of depots, offices and dealers. Last year, the company merged Cummins Sales & Services India (CSS) and Cummins Auto Services (CASL) with itself approved by the high court of judicature, Mumbai, became operative from Apr. 01, 2008.

Cummins is largest diesel engine manufacturer in the non-automotive segment in the 60-
2000 hp range of India. The company manufactures internal combustion engines, namely diesel engines of all sizes and capacities, reciprocating piston engines, gas turbine engines, gasoline engines and so on. Company also has an agreement with Cummins Westport Inc, Canada (CWI) for transfer the technology to the company for manufacture of new Engine Platform called B Gas International (BGI). It is a leader in the 200-2000 hp range having more than 50 per cent share. For the higher end 5000 hp and over it has tied up with Wartsila. Company has its products profile in the power generation, construction and industrial equipment, marine, locomotive and oil field markets. Cummins is the sole supplier of 28 liter, 38 liter and 50 liter diesel engines for power generation applications for Cummins Inc's global network.

The company derives a major chunk of its revenues from the power sector. It also manufactures turbochargers in collaboration with Holset Engineering, UK, and flameproof diesel engines (used in hazardous industries) in collaboration with Pyroban, UK. The manufacturing facilities are based at Pune plant-I, spread over 93.2 acres, which is a complete integrated engine manufacturing plant. An R&D tech center with investment of over Rs 170 million has also been set up. Cummins India exports engines to countries like USA, UK, France, Germany, Belgium, Holland, Singapore and Korea.

Cummins Research and Technology India (CRTI), a 50:50 JV between CUMMINS and Cummins Inc., USA is engaged in providing IT-enabled services in the field of mechanical development for diesel engines and related components. Cummins India is planning to set up a greenfield facility, with an investment of up to Rs 2.5 billion for expanding its capacity. The new unit is expected to be two times the size of the company's present plant in Kothrud, Pune.

Valuation:

Company's net Profit is expected to grow at a CAGR of 20% for the next 2-3 years. At current market price, the stock is trading at 15 P/E multiple of its FY2010 estimated earnings. We recommend investors to "BUY" Cummins India Limited" with Medium to long term "investment prospective.