Cummins India share price target raised on data centre opportunity; details here

Shares of Cummins India

Ltd. were trading lower on Monday, June 1, despite several brokerages raising their earnings estimates and price targets following the company's stronger-than-expected March quarter performance.

Brokerages largely attributed the earnings beat to robust domestic demand, rising contributions from the fast-growing data centre segment and continued strength in the distribution business, although concerns around exports persisted.

Jefferies maintained its 'Buy' rating and raised its target price to ₹7,100.

The brokerage identified three key drivers that could support margins going forward: a higher share of the distribution business following the CPCB emissions upgrade, increasing demand from data centres, and greater localisation of components used in upgraded engines.

Following the March-quarter earnings beat, Jefferies raised its FY27 and FY28 earnings estimates by 5% to 7%.

HSBC also reiterated its 'Buy' rating and increased its target price to ₹6,500.

The brokerage highlighted strong growth in the power generation and distribution businesses, which helped drive nearly 20% growth in quarterly profit. HSBC expects data centre demand, sustained distribution growth and a recovery in exports to support an earnings CAGR of around 20% between FY26 and FY29.

Macquarie retained its 'Outperform' rating with a target price of ₹5,750.

The brokerage said that revenue rose 23% year-on-year during the quarter, led by 30% growth in the domestic market, while exports declined 6% amid geopolitical uncertainties. Although input cost pressures weighed on gross margins, management remains optimistic that export growth will normalise over time.

Citi maintained its 'Buy' rating and raised its target price to ₹6,700. The brokerage said profit for the March quarter exceeded expectations, aided by higher deliveries to hyperscale data centre customers.

Citi said that both hyperscaler and colocation demand have strengthened, while non-data centre power generation demand has remained resilient due to multiple end-market drivers. It also highlighted the benefits of higher localisation levels and expects the distribution business to provide additional growth tailwinds.

Not all brokerages shared the same optimism. UBS retained its 'Sell' rating despite acknowledging that quarterly performance exceeded expectations.

The brokerage maintained a target price of ₹3,500, citing valuation concerns even as revenue, profit and margins came in ahead of estimates.

Kotak Institutional Equities downgraded the stock to 'Reduce' and assigned a target price of ₹5,600.

While the brokerage acknowledged that the quarter surpassed consensus expectations, it pointed out that a sharp rise in data centre-linked revenue helped offset market share losses in certain power generation segments.

Kotak said the results reinforced Cummins India's ability to capitalise on improving macroeconomic conditions, pass on cost increases and strengthen its exposure to the expanding data centre ecosystem.