Benign valuations, long-term triggers favour Cummins India stock

Weak exports and sluggish capex cycle suggest that there would be some near-term pain

After dropping 48 per cent since the beginning of the year, the Cummins India stock has recovered. Over the past five trading sessions, the stock has gained about 35 per cent. While the fall was on account of weak capex cycle, brokerages believe the correction is overdone and ignores expected gains from new emission norms and lower costs.

The implementation of the Central Pollution Control Board’s CPCB4+ emission norms (requires electronic engine platforms compared to mechanical ones) from July 2021 will help Cummins India gain market share. The firm not only has access to its parent’s product pipeline, but is also