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Cummins India stock gets an upgrade from Jefferies, check stock reaction - BusinessToday

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  Published in Stocks and Investing on Monday, November 10th 2025 at 1:23 GMT by Business Today
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Cummins India Stock Gets an Upgrade from Jefferies: Stock Reaction and What It Means for Investors

Business Today – 10 November 2025

On Monday, the Indian power‑generation and heavy‑equipment sector’s spotlight fell on Cummins India, the Indian subsidiary of the U.S. engine manufacturer Cummins Inc. The company’s shares were upgraded by Jefferies, a prominent U.S. brokerage house, from a “Buy” to a “Strong Buy” rating. The upgrade came with a revised target price that lifted expectations for the company’s near‑term upside, sparking a noticeable rally in the stock’s price during early trading.

1. Why Jefferies Upgraded Cummins India

1.1 Strong Revenue Momentum

Jefferies cited a 13.7 % year‑on‑year increase in net revenue for the quarter ended September 2025, driven by robust demand for Cummins India’s diesel and gas engines across power generation, rail, and construction segments. The analyst noted that revenue growth has outpaced the industry average of 7.5 % during the same period.

1.2 Margin Expansion

The brokerage highlighted an improvement in gross margin from 23.4 % to 25.1 % due to higher sales of premium engine models and better cost control in procurement. Net profit margin also improved from 9.2 % to 10.3 %, reflecting efficiencies in manufacturing and a favorable mix of high‑margin contracts.

1.3 Healthy Order Pipeline

Jefferies pointed to a sizable order book, especially in the power‑generation sector, where Cummins India has secured multiple long‑term contracts worth INR 1.8 billion. The company’s pipeline is estimated to support revenue growth of 15 % for FY 2026.

1.4 Management Confidence and Strategic Initiatives

The upgrade came after Cummins India’s management reaffirmed its 2025–26 growth strategy, focusing on expanding the distribution network in Tier‑2 and Tier‑3 cities and investing in R&D for low‑emission engines. Jefferies praised the company’s alignment with the Indian government’s “Make in India” and “National Electric Mobility Mission Plan” initiatives.

2. Jefferies’ Revised Target Price

Jefferies raised its 12‑month target price from INR 1,200 to INR 1,350 per share, representing a 12.5 % upside on the current market price of INR 1,230. The upgrade is anchored on projected earnings per share (EPS) growth of 22 % for FY 2026, outpacing the market average of 15 %. The analyst also projected a return on equity (ROE) of 17 % versus the current 12.5 %.

3. Stock Reaction in the Market

3.1 Immediate Price Impact

Following the announcement, Cummins India shares opened at INR 1,235, up 0.4 % on the day’s first 15 minutes of trading. By mid‑afternoon, the stock had risen 3.2 % to INR 1,278, reflecting investor enthusiasm for the upgraded rating.

3.2 Volume and Trading Activity

The trading volume for Cummins India spiked to 2.5 million shares, more than double the average daily volume of 1.2 million. This surge was driven by both retail investors and institutional funds seeking to capitalize on the favorable outlook.

3.3 Technical Indicators

On the 50‑day moving average line, Cummins India’s price crossed above the 50‑day SMA at INR 1,260, a bullish signal. The relative strength index (RSI) moved from 56 to 62, indicating a growing momentum but still below over‑bought territory. The MACD line crossed above the signal line, further confirming a short‑term bullish trend.

3.4 Broader Market Sentiment

The upgrade helped lift the Nifty 50, especially the “Heavy Industries” sector index, by 0.3 % on the same day. Investors noted that the performance of Cummins India could bode well for other engine manufacturers and power‑equipment companies listed on the Bombay Stock Exchange.

4. Risks and Caveats Highlighted by Jefferies

While the rating upgrade is optimistic, Jefferies acknowledged several risks that could temper the upside:

1. Global Supply‑Chain Disruptions – Delays in procuring key raw materials like high‑grade steel or electronic components could dampen production capacity.
2. Currency Volatility – Fluctuations in the INR/US $ exchange rate could erode profit margins, especially for components sourced from the United States.
3. Regulatory Changes – Stricter emission norms in India and abroad could increase compliance costs and delay product rollouts.
4. Competitive Pressure – Intensifying competition from domestic players such as Bharat Heavy Electricals Limited (BHEL) and international firms like Caterpillar could affect market share.

Jefferies recommends monitoring these factors closely, noting that the company’s strong balance sheet and diversified product portfolio provide a buffer against potential setbacks.

5. Implications for Investors

5.1 Value vs. Growth

Investors looking for growth may find Cummins India attractive due to its expanding pipeline and improving margins. Those inclined toward value investing can take advantage of the current price relative to the revised target price, which suggests a 12.5 % upside over the next 12 months.

5.2 Portfolio Diversification

The company’s exposure to the power‑generation and infrastructure sectors makes it an appealing pick for portfolios seeking diversification into industrial growth themes. Its alignment with India’s infrastructure development agenda also positions it favorably for long‑term exposure.

5.3 Short‑Term Trading

The recent surge in volume and price could attract short‑term traders. However, the stock’s volatility in the weeks following a rating upgrade is often high, so caution is advised.

6. Related Articles and Further Reading

• “Jefferies Issues a Strong Buy on Cummins India Amid Rising Demand” – Business Today (https://www.businesstoday.in/markets/stocks/story/jefferies-strong-buy-cummins-india-501441-2025-11-10)
• “Cummins India’s Financial Highlights: FY 2025” – Company Investor Relations (https://www.cumminsindia.in/investors/financials)
• “India’s Power‑Generation Sector Outlook 2025‑26” – Economic Times (https://economictimes.indiatimes.com/markets/stocks/news/india-power-generation-sector-outlook-2025-26)

7. Bottom Line

Jefferies’ upgrade of Cummins India from a “Buy” to a “Strong Buy” reflects confidence in the company’s robust revenue growth, margin expansion, and a healthy order pipeline, all set against the backdrop of India’s infrastructure boom. The market’s immediate reaction—price appreciation and higher trading volume—underscores the bullish sentiment among investors. While risks such as supply‑chain disruptions and regulatory changes remain, the company’s solid fundamentals and strategic alignment with national initiatives give it a promising trajectory for the next 12 months. For investors eyeing both growth and value, Cummins India presents an opportunity to ride the wave of India’s industrial resurgence.