We remain constructive on 3M India after analysing its FY25 annual report. Takeaways: (1) There is focus on local manufacturing. Revenues from local manufacturing have increased from 52.9% in FY14 to 59.4% in FY25. (2) There is a steady increase in the number of distributors from 1,005 in FY23 to 1,123 in FY25. There is also an increase in Qcommerce and products are now available in 100 cities. (3) Royalty and corporate management fees were 4.8% of net sales. This is lower than 6.2% in FY19. As domestic manufacturing increases, royalty payments may increase. (4) There is a steady flow of product launches, even in FY25, and 3M India also plans to launch products for India’s EV segment. (5) The Chairman and MD’s letters also indicated that there are opportunities in driving growth in rural markets and also in digital transformation.
OutlookWe maintain BUY with a DCF-based TP of INR 35,610, implying target P/E of 56x FY27E.
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