Here’s why Cummins India shares recovered 8% from the lows to surge on Thursday

Shares of Cummins India Ltd. are trading with gains of over 4% on Thursday, February 5, having recovered over 8% from the lows of the trading session after the management shared some bullish commentary with regards to data centers during its earnings call.During its earnings call, the management guided for double-digit domestic revenue growth across segments for financial year 2027, adding that the data center business will also see double-digit growth, considering the hyperscaler inquiries have increased.

The management expects the next three to four years to see positive developments for the data centers business, which will also gain momentum in the domestic market.Currently, 25% of the revenue mix in the power generation business is from Data Centers.

For the December quarter, Cummins India’s revenue and EBITDA missed street expectations, while the profits were lower due to an exceptional item of ₹126.5 crore. Domestic sales were also down 2%, while export sales grew by 2%.During the earnings call, the management said that the exports remain choppy with no clear trend, and that the sales mix hit was offset by cost cuts.

Brokerage firm Nomura maintained its “buy” rating on Cummins India with a price target of ₹4,780, citing the company’s strong balance sheet and disciplined capital allocation.

On the flip side, UBS has a “Sell” rating on the stock with a price target of ₹3,400 and JM Financial has a “sell” rating with a price target of ₹3,630.

Shares of Cummins India are now trading 4.3% higher on Thursday at ₹4,380, having recovered from the intraday low of ₹4,032 from earlier in the day. The stock has risen 50% over the last 12 months.