Sell on Cummins India with a target at Rs 840: JM Financial

JM Financial Institutional Securities Limited maintains sell rating on Cummins India post March quarter results with a 12-month target price of Rs 840.

Cummins India is considering proposal to shut down its low kVA generator set (7.5kVA to 160kVA) assembly plant, located at Pirangut ( Pune) and outsource manufacturing on contract basis.

"Given the intense competition from unorganized players and low product differentiation in this segment, we believe this is a positive development," said the brokerage note.

"However, our cost structure analysis indicates marginal benefit of 10-20bps at EBIT level as this segment constitutes only 6-8% of total sales," the note added.