3M India Q1 Results Review - Ebitda Margin Near Its Historical Peak; Downgrade To Add: ICICI Securities

ICICI Securities Report

3M India Ltd. has reported 18%+ YoY Ebitda growth in eight out of past 10 quarters. Revival in key customer industries such as automotive, industrial, infrastructure, electronics and mobile has led to strong revenue growth and expansion in Ebitda margin for 3M India.

However, we note Ebitda margin is now near historical peak levels (i.e., 19.6% in Q1 FY25). Hence, we believe the potential for Ebitda margin expansion from current levels (19.3% in FY25E) is likely to be limited.

Slowdown in automotive and /or industrial segments may also pose risk to revenue growth in near term. While we remain positive on 3M India led by established competitive advantages and long-term growth potential, we downgrade the stock to Add from Buy on 19.5% rally in stock price over the past six months.

We value it at DCF-based revised target price of Rs 41,960 (implying 62 times FY26E earnings per share; earlier target price: Rs 39,500).

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