Buy 3M India; target of Rs 33500: ICICI Securities

ICICI Securities is bullish on 3M India has recommended buy rating on the stock with a target price of Rs 33500 in its research report dated February 09, 2025.

Broker Research

February 10, 2025 / 21:30 IST

BUY

26 Aug, 2025 12:21

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ICICI Securities's research report on 3M India

3M India’s EBITDA margin of 14.1% in Q3FY25 was at its lowest since the past nine quarters. We believe INR depreciation and higher freight cost impacted 3M’s margins. While the healthcare segment reported strong growth with margin expansion, we note all other segments reported EBIT margin contraction. We believe, the trend of strong growth in healthcare and weakness in other segments may continue for the next 2–3 quarters. We also model the INR depreciation to impact margins in H1CY25. Weakness in the automotive sector (key client sector for 3M India) may also impact margins in FY26. We remain positive on 3M India led by established competitive advantages and long-term growth potential. We cut FY25-26 estimates by 3–5% to factor in weaker-than-expected Q3FY25 and a likely slow-down in the automotive sector in FY26-27. With ~30% correction in stock price over the past six months, we believe there is valuation support at current market price. We remain constructive. Retain BUY.

Outlook

We model 3M India to report revenue and PAT CAGRs of 9.5% and 9.2%, respectively, over FY24-27E with RoE> Cost of capital. We value the stock as per the DCF methodology with a revised TP of INR 33,500 (implied target P/E of 50x 27E; earlier: INR 40,410). Risks: Steep increase in competitive pressure and commodity inflation.

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