Market Price Rs 10150 (FV 10) Analyst : Janak Shah (M.B.A. Finance)
Market Cap Rs 11700 crs Date: 13th August 2015
Target : Rs 12500 Multinational & Compounder
About the Company:
3 M has a global presence in 200 countries. Operations in more than 70 countries. It has over 90000 employees globally. 3M India has plants at various locations in Bengaluru, Ahmedabad, Pondicherry, Pimpri (Pune) and Ranjangaon ( Pune). It has head office at Bengaluru. It has R & D centre at Bengluru and Gurgaon. It has over 2000 employees. More than 8000 3 M products sold in India. More than 20 patents filed.
Innovations for India include the consumer range of floor cleaning products, infection prevention products for hospitals, tamper evident labels, traffic & road safety products, automotive fillers and underbody coatings, protective filler coatings for outdoor applications, to name a few. 3M caters to many businesses which include Consumers, Electronics & Energy, Healthcare, Industrials, Safety & Graphics.
Some of its famous brands are Scotch Brite, Post it, Scotch, ScotchPrint, Nexcare, Scotch Guard, Vikuiti , Commander and many more.
It has lot of uses in Pharma such as dental care and it is used in fillings of teeth and enamel.
The brand is Tegaderm in dental category.
The niche products the company offers puts it into a sort of monopoly zone.
The company is a debt free company and though the growth for the last 5 years has been great. If we look at last year, that is year 2015, the company posted sales of 1808 crores and net profit was at 108 crores. This year in Q1 , 2016 the company posted sales of 511 crore and net profit of 39.5 crores.
The company has a bookvalue of Rs 729 per share and is traded 12X Price to book which can be termed a bit expensive but the monopoly nature of industry compensates it.
The company is about to launch some new products in healthcare, industrials and personal care which will shoot the sales and net profits in higher direction.
Promoters hold about 75% Fii’s hold 9.69% while Dii’s hold 3.07% with 12.24 with public.
Comparison to Peers:
There is no company in this category which is listed and can be compared to 3M India.
3M India’s products touch us in our daily life. We use it at home, office and even in healthcare. It is very difficult to create such a brand again. We always say that such companies command a very high PE which was near 100 last year and now in 70’s range. It will always continue to command high PE and the market fancy will remain too because of the parentage of the company and high quality and perception standards.
The current rate of Rs 10150 per share is tipped to touch Rs 12500 in the next 1 year time frame. If kept for longer, it can become a multibagger also. It has very niche products and therefore it will always command premium in terms of PE and market fancy.
( Disclosure: The analyst has no holdings in the company as on date of issue being published. The analyst has submitted all information as per SEBI requirement for the criteria of a research analyst)