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ICICI Securities Report
Following a review of 3M India Ltd.'s FY24 annual report, our conviction on the company's performance and potential remains strong. We note:
A marked rise in new product development. Also, with 3M's customer industries (automotive/infrastructure etc.) growing at a healthy rate, the company too has stepped-up innovation.
The Chairman and Managing Director's letter focuses on investments in infrastructure and the evolving automotive landscape – summarily 3M is likely to be a net beneficiary.
Working capital days is steadily shrinking – reduced to 22 in FY24, from 63 in FY20 (FY23: 33 days). Accordingly, FCF generation is stronger.
While Ebitda margin expansion is healthy, it is near FY11–24's peak levels.
Our optimism on 3M India is bolstered by its established competitive edge and long-term growth potential. With the stock price correcting ~15% over the past three months, we upgrade our rating to Buy, from Add.
We value the stock at a DCF-based unchanged target price of Rs 41,960 (implying 62 times FY26E earnings per share).
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