The parent company of Cummins India has guided for a very weak year ahead for India with an expectation of about 15% revenue decline in powergen segment
Cummins Inc, the parent company of Cummins India, while declaring its first quarter results has expressed worries over weak demand from powergen and mining segments from the country. "In the post-results conference call, Cummins Inc further mentioned that India powergen revenues declined 46% year-on-year in US dollar terms. The parent has also guided for a very weak year ahead for India and expects 15% revenue decline in powergen segment. We retain our Reduce rating on continued slowdown overhang and expensive valuation for Cummins India," says Nomura in a research note.
According to Nomura estimates, after adjusting for the currency impact, the parent's numbers imply about 38% decline in India powergen revenues. It said, "This compares with a 26% decline that we were building in for the segment in this quarter. Note that powergen segment contributes about 30% of total sales for Cummins India."
Separately, Cummins has also upped its own revenue growth guidance for CY14 on the back of strong North American market – this might not be too positive for its Indian unit exports as North America is less than 15% of total exports for the Cummins India.
According to Nomura, notably, Kirloskar Oil Engines, one of the key competitors for Cummins India, posted better-than-expected topline for March 2014 quarter. Revenues trend improved for Kirloskar Oil Engines improved in second half of FY14, as it grew by around 6.0% compared with a decline of about 9% during first half of FY14.
"This seems to be in contrast with the implied numbers for Cummins India and might suggest that growth in high low/ mid power segment is stabilising/ recovering, while that in high HP segment continues to face headwinds," Nomura added.
Nomura said it has retained its 'reduce' rating on Cummins India with a price target of Rs385 as against the company's closing price of Rs550 as on 29 April 2014.
Cummins India closed Friday 4.5% down at Rs523.8 on the BSE, while the 30-share Sensex ended the day marginally down at 22,403.
With Elango, the entire top management of Cairn India has quit the company since billionaire Anil Agarwal-owned Vedanta in 2010 announced buying majority stake in it
Cairn India's interim chief executive P Elango has quit the company, completing the exit of all of the tier-1 management of the company since it was acquired by mining group Vedanta Resources plc.
Elango, who was named interim CEO in August 2012 when the the company's face Rahul Dhir resigned, cited "personal reasons" for the decision to step down, Cairn said in a statement.
The move came as a surprise as Elango, under whom Cairn touched 200,000 barrels per day of output from its showpiece Rajasthan oilfields, was widely tipped to become the full-time CEO of the company.
Last year, Elango was given a 40% hike in salary, suggesting that he would be taking on a larger role within the company but promoter Anil Agarwal group continued him as interim CEO.
Cairn said the company board has accepted Elango's resignation and added Sudhir Mathur, chief financial officer, has taken over additional charge as interim CEO.
"Tom Albanese, CEO Vedanta Resources plc, and Mike Yeager, Chairman, Operations Review Board, Cairn India, will continue to work closely with the leadership team in managing the business under the guidance of the Board," the statement said.
With Elango, the entire top management of Cairn India has quit the company since billionaire Anil Agarwal-owned Vedanta in 2010 announced buying majority stake in the firm from Scottish explorer Cairn Energy Plc.
Rick Bott, who was Executive Director and Chief Operating Officer of Cairn India, quit the firm on June 15, 2011, while its Executive Director and Chief Financial Officer Indrajit Banerjee resigned with effect from August 23, 2011.
David Ginger, Cairn India's director of exploration and new ventures, quit the firm shortly after that and Dhir put in his paper after the Cairn-Vedanta deal was completed. Company's Director, Commercial and New Business Ajay Gupta quit the firm in January 2013.
In February this year, Sundeep Bhandari, the man credited with laying the foundation and then building what is now Cairn India, quit the company. He along with Dhir, Bott, Banerjee and Ginger ran the firm before Vedanta took over.
Vedanta completed the $8.67 billion acquisition of Cairn India in December 2011.
Mathur came in from Aircel after Dhir quit.
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