Buy 3M India, target price Rs 26000: ICICI Securities

ICICI Securities has buy call on 3M India with a target price of Rs 26000. The current market price of 3M India Ltd. is Rs 19999.05. Time period given by analyst is one year when 3M India Ltd. price can reach defined target.

3M India Ltd., incorporated in the year 1987, is a Large Cap company (having a market cap of Rs 19785.35 Crore) operating in Diversified sector.

3M India Ltd. key Products/Revenue Segments include Sale of Products, Sale of services, Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 934.81 Crore, up 12.09 % from last quarter Total Income of Rs 833.97 Crore and up 12.04 % from last year same quarter Total Income of Rs 834.38 Crore. Company reported net profit after tax of Rs 110.92 Crore in latest quarter.

Investment Rationale
Amidst input material inflation, supply-chain challenges and INR depreciation, timely price hikes and other cost-saving initiatives helped 3M India to expand its gross and EBITDA margins by 191bps and 464bps YoY, respectively. The brokerage also remains enthused by 35% YoY revenue growth in healthcare segment (highest margin segment). Increase in manufacturing activities in India post PLI and higher budgetary allocations to investments would potentially be a medium-term positive for 3M India. It remains positive on 3M India due to competitive advantages like (1) strong brands, (2) established distribution network and global relationships with large manufacturers, and (3) access to parent’s technology pool. It increases FY23-24E earnings to factor in improvement in profitability on multiple cost saving initiatives by the company. Maintain BUY with a DCF-based TP of Rs 26,000 (implied P/E 55x of FY24E EPS).

Promoter/FII Holdings
Promoters held 75.0 per cent stake in the company as of 31-Mar-2022, while FIIs owned 5.34 per cent, DIIs 5.45 per cent.