Mehabe score: 2 G Factor: 3 Piotski Score: 6 The stock has a rating SELL. The mehabe team score is reflective of its fundamental and technical merits. A rating above 8 is considered good buy. The stock has a G-Factor of 3 and Piotski score of 6.
Description
3M India is a subsidiary of 3M Company, USA. The Company manages its operations in four operating segments: Safety & Industrial , Transportation & Electronics, Health Care and Consumer. In India, the Company has manufacturing facilities at Ahmedabad, Bangalore, Pune and has a R&D Center in Bangalore.(Source : 202003 Annual Report Page No:137)Site:3MINDIAMain Symbol:3MINDIA
Stock trades at 24742.0, below its 50dma 24957.68. However it is trading above its 200dma 23804.95. The stock remains weak in the short term due to near term bearish momentum. However overall bullish structure remains intact. Price action will further build up as it moves above its dma50, currently situated at 24957.68.
The 52 week high is at 31000.00 and the 52week low is at 18000.00
Price Chart
P/E Chart
Sales and Margin
Strengths
– has reduced debt.
– is almost debt free.
Weakness
– Stock is trading at 12.55 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 2.50% over past five years.
– has a low return on equity of 11.87% for last 3 years.
Competition
– The industry trades at a mean P/E of 50.3x. 3M India trades at the industry’s max P/E of 188.17x. 3MINDIA trades at a P/E of 188.0x
– Industry’s mean G-Factor is 3.9 while the mean Piotski score is 7.0. 3MINDIA has a G-Factor of 3 and Piotski scoreof 6.
– Average 1 month return for industry is 2.7%. The max 1- month return was given by Rain Industries: a return of 32.51 %
Quarterly Results
Sales for period ended Mar 2021 is Rs 769.0 cr compared to Rs 627.0 cr for period ended Mar 2020, a rise of 22.6%
Company reported operating profit of Rs 96.0 cr for period ended Mar 2021, operating profit margin at 12.5 %.
Operating profit was negative for the same period last year thus company has improved its margins this year
The EPS for Mar 2021 was Rs 58.31 compared to Rs 46.76 for previous quarter ended Dec 2020 and Rs -22.93 for Mar 2020
Profit & Loss Statement
Profit&Loss Comments
Company reported sales of Rs 2420.0 cr for period ended Mar 2021 vis-vis sales of Rs 2765.0 cr for the period ended Mar 2020, a fall of 14.3%. The 3 year sales cagr stood at -1.8%.
Operating margins shrank to 10.0% for period ended Mar 2021 vis-vis 12.0% for period ended Mar 2020, contraction of 200.0 bps.
Net Profit reported at Rs 149.0 cr for period ended Mar 2021 vis-vis sales of Rs 219.0 cr for the period ended Mar 2020, falling 47.0%.
Company reported a poor Net Profit CAGR of -21.8% over the last 3 years
Balance Sheet Statement
Cash Flow Statement
Cash Flow comments
CashFlow from operating activities was positive.
CashFlow from operating activities: Rs 312.0 cr for period ended Mar 2021 vis-vis Rs 218.0 cr for period ended Mar 2020
Sales Growth
Profit Growth Statement
Profit Growth Statement
Stock Price CAGR
Return of Equity
General Comments
– The company has worsened on its Return on Equity (RoE) metric. The RoE on Last Year basis was 7.0% compared to 12.0% over the last 3 Years. – The stock has given a return of 15% on a 1 Year basis vis-vis a return of 2% over the last 3 Years. – The compounded sales growth on a TTM bassis is -12% vis-vis a compounded sales growth of -2% over the last 3 Years. – The compounded profit growth on a TTM basis is -32% vis-vis a compounded profit growth of -22% over the last 3 Years.
Ratios
Shareholding Pattern
– FII shareholding has remained largely constant. The Jun 2021 fii holding stood at 3.95% vis-vis 3.76% for Mar 2021 – Public shareholding has remained largely constant. The Jun 2021 public holding stood at 13.35% vis-vis 13.6% for Mar 2021
Conclusion
– has reduced debt.
– is almost debt free. – Stock is trading at 12.55 times its book value
-Though the company is reporting repeated profits, it is not paying out dividend
-The company has delivered a poor sales growth of 2.50% over past five years.
– has a low return on equity of 11.87% for last 3 years.
Fundamentally, the stock remains weak. The business fundamentals are on shaky ground. Weak near term results have dampened and questioned business drivers. We suggest to wait for a upturn in business performance.
Technically, the stock reflects the poor fundamentals. The stock remains below its 50 DMA 24957.68 and is trading at 24742.0. It has shown near term lack of bullish momentum. We suggest to observe price action. However as investors, who like to avoid timing the markets, we suggest to avoid the stock
