Shares of a company engaged in diverse business segments including safety & industrial, transportation & electronics, and healthcare moved up by nearly 1.2 percent to Rs. 28,700 on BSE, during Thursday’s trading session, with a market cap of Rs. 31,523 crores.
3M India Limited, an Indian Subsidiary of US-based 3M Company, operates across four key segments: Safety & Industrial, Transportation & Electronics, Health Care and Consumer.
Within the Consumer segment, the company is recognized for its Scotch brand products, including the Scotch-Brite Toilet Bowl and Rim Brush with Caddy, which was specifically introduced for the Indian market.
Price Movement
The stock hit its 52-week high at Rs. 41,000 on 1st August 2024, and compared to current price levels, the stock is trading at a discount of nearly 32 percent. The stock has delivered negative returns of nearly 7 percent over a one-year period, while around 2 percent of positive returns in the last one month.
Segment Performance for Q3 FY25
3M India reported a total segment revenue of Rs. 1,090 crores in Q3 FY25. The Transportation & Electronics segment led with Rs. 435.5 crores, accounting for 39.95 percent of the company’s total revenue.
The Safety & Industrial segment followed, generating Rs. 334 crores and contributing 30.6 percent, while the Health Care segment reported Rs. 198.7 crores, making up 18.2 percent of the total revenue. The Consumer segment recorded Rs. 114.11 crores, contributing 10.4 percent, and the Other segment accounted for Rs. 7.5 crores, representing 0.68 percent of the total revenue.
During Q3 FY25, the company reported 8.4 percent YoY sales growth, though sales declined 2 percent sequentially. Growth was primarily driven by the Health Care segment, which grew 23.2 percent, followed by the Transportation & Electronics segment at 10.3 percent and the Consumer segment by 8.1 percent. However, the Safety & Industrial segment declined by 1.4 percent.
Despite broadly soft end-use markets, the company focused on targeted investments in commercial execution and outperformed end-use market trends in key areas such as automotive, consumer, and healthcare. However, rising material and freight costs created headwinds, adversely impacting margins.
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Financial Performace and Ratio
3M India experienced marginal growth in its revenue from operations, showing a year-on-year increase of around 8.3 percent from Rs. 1,006 crores in Q3 FY24 to Rs. 1,090 crores in Q3 FY25.
However, its net profit decreased during the same period from Rs. 135 crores to Rs. 114 crores, indicating a decline of nearly 15.6 percent YoY. EBITDA for Q3 FY25 decreased by about 15 percent YoY to Rs. 171 crores, down from Rs. 201 crores in Q3 FY24. In terms of key financial metrics, 3M India has a Return on Equity (RoE) of 24.8 percent and a return on capital employed (RoCE) of 33 percent.
The company’s price-to-earnings (P/E) ratio is 56.9, significantly higher than the industry average of 12.3, suggesting the stock may be overvalued. Additionally, 3M India maintains a debt-to-equity ratio of 0.01, indicating minimal leverage.
Key Focus Areas
The company is focused on organic growth by revitalizing R&D, accelerating new product launches, and enhancing execution at the customer interface. Additionally, it is committed to operational excellence by reducing complexity, lean manufacturing, optimising supply chain management, minimising yield loss, and improving service levels, all while maintaining lower inventory levels.
In terms of capital allocation, the company prioritizes fully funding organic growth, offering attractive dividends, and maintaining a strong balance sheet. It also strategically deploys excess cash through share repurchases, mergers and acquisitions (M&A), and a disciplined portfolio review.
Written by Shivani Singh
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