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Stock Data

Sector Diversified

Face Value Rs. 10.00

52 wk. High/Low (Rs.) 4250.95/1775.00

Volume (2 wk. Avg.) 879000

BSE Code 523395

Market Cap (Rs.In mn) 40047.08

Financials (Rs.in.mn) FY10 FY11E FY12E

Net Sales 10991.83 11761.26 12937.38

EBIDTA 1583.80 1847.85 2019.70

PAT 928.37 1095.85 1199.11

EPS 82.41 97.28 106.45

P/E 43.14 36.54 33.40

3M India Ltd BUY F

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SYNOPSIS

3M India Ltd is fundamentally a science-based

company producing thousands of imaginative

products.

A leader in scores of markets from health care

and highway safety to office products and

abrasives and adhesives.

3M India Ltd has shown a good performance

yearly with net sales of Rs 2956.57 million

from Rs 2081.21 million with a change of

42.06%.

The OPM and NPM for the quarter stood at

12.96% and 7.62% against 10.90% and 6.36%.

Net Sales and PAT of the company are

expected to grow at a CAGR of 8% and 14%

over 2009 to 2012E respectively.

The EPS for the quarter stood at Rs 20.00 from

Rs 11.75 with face value of Rs 10/- each.

Net Profit after tax stood at Rs 225.25 million

from Rs 132.38 million with 70.15%.

1 Year Comparative Graph

3M India Ltd BSE SENSEX

V.S.R. Sastry

Equity Research Desk

vsrsastry@firstcallindiaequity.com

Dr. V.V.L.N. Sastry Ph.D.

Chief Research Officer

drsastry@firstcallindia.com

C.M.P: Target Price: Rs.3555.00 Rs.4017.00

Share Holding Pattern

Dec 23nd, 2010

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Peer Group Comparison

Name of the company CMP(Rs.) Market

Cap.(Rs.Mn.) EPS(Rs.) P/E(x) P/Bv(x) Dividend (%)

3M India Ltd 3555.00 40047.08 82.41 43.14 9.09 0.00

Aditya Birla Nuvo 834.55 85966.70 39.88 20.93 1.90 50.00

Balmer Lawr 584.00 9511.10 75.74 7.71 2.06 230.00

DCM Shriram Inds 78.10 1358.80 0.00 0.00 0.67 45.00

Q2 FY 11 Results Update

3M India Ltd has shown a good performance yearly with net sales of Rs 2956.57

million from Rs 2081.21 million with a change of 42.06%. The Operating profit for the

quarter stood at Rs 383.18 million from Rs 226.80 million with a change of 68.95%.

The profit after tax stood at Rs 225.25 million from Rs 132.38 million with 70.15%.The

EPS for the quarter stood at Rs 20.00 from Rs 11.75 with face value of Rs 10/- each.

The equity capital for the Quarter stood at RS 112.65 million. The OPM and NPM for

the quarter stood at 12.96% and 7.62% against 10.90% and 6.36%.

Quarterly Results - standalone (Rs in mn)

As At Sep-10 Sep-09 %change

Net sales 2,956.57 2081.21 42.06

PAT 225.25 132.38 70.15

Basic EPS 20.00 11.75 70.15

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Break up Expenditure

Total expenses incurred during the quarter Rs 2584.02 million i.e., 83% of the total

sales. Consumption of raw materials occurred 29% of the total expenditure, employees

cost was 15% and Purchase of traded goods were 36% depreciation for the quarter was

very less of only 2%.

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Segmental Revenue

3M India has various segments of which most of the revenue has come from Industrial

and Transportation Business consisting of 47%.

Particulars Q2 FY 11 (Rs in Mn)

Industrial & Transportation

Business 1,387.83

Display & Graphics Business 477.41

Health Care Business 405.22

Safety, Security & Protection

Services Business 337.63

Consumer & Office Business 246.99

Others 78.32

Total 2,933.41

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Company Profile

3M is fundamentally a science-based company producing thousands of imaginative

products, a leader in scores of markets - from health care and highway safety to office

products and abrasives and adhesives. Their success begins with their ability to apply

their technologies - often in combination - to an endless array of real-world customer

needs. Of course, all of this is made possible by the people of 3M and their singular

commitment to make life easier and better for people around the world.

3M Businesses

Consumer and Office Business

Supplies an array of products that keep homes cleaner, offices organized and

buildings well-maintained, we're home to some of the world's best-known

brands, including Scotch®, Post-it®, Scotch-Brite® and Scotchgard™. They've

created many product categories and are a leader in the markets they serve.

Their recent product breakthroughs include Post-it® Super Sticky Notes in

unique shapes and colours - ideal for use on a broad range of non-paper

surfaces; and a new family of Scotch-Brite® cleaning products, which give

consumers the right scrubbing power for a host of cleaning jobs and have given

us entry into a large and growing market.

Display and Graphics Business

They are a world leader in films that brighten the displays on electronic

products, such as flat-panel computer monitors, cellular phones, personal

digital assistants and liquid crystal display (LCD) televisions. They're also a

leader in touch screens and touch monitors; optical components used in

projection televisions; reflective sheeting for transportation safety; materials and

systems for producing high-performance, attention-getting graphic images.

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Electro and Communications Business

They're a leading supplier of innovative solutions to the electrical, electronics

and communications industries. Their products enable the efficient

transmission of electrical power and speed the delivery of information and

ideas.

They successfully compete in numerous market segments, including electrical

utilities; electrical construction, maintenance and repair; OEM electrical and

electronics; computers and peripherals; consumer electronics; and

telecommunications (central office, outside plant and enterprise). Additionally,

they supply the aerospace, military, automotive and medical markets.

Health Care Business

3M Health Care is a global leader in medical and oral care products, and drug

delivery and health information systems. They supply innovative and reliable

products that help health care professionals improve the quality of care.

Industrial and Transportation Business

They strive to understand the diverse market segments - construction, food and

beverage, metal fabrication, oil and gas, woodworking and more - that make up

the industrial marketplace. They then use that knowledge to provide innovative

products and other solutions that make industrial customers more competitive.

Their market-focused, customer-centric approach increases their efficiency and

makes it easy for customers to do business with us. With our global technology,

manufacturing and marketing network, they partner with both multinational

and local customers.

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Safety, Security and Protection Services Business

They're a leader in several large and fast-growing markets, including personal

safety, security and facilities protection. Their major products include personal

protection product components, laminates that are used to help prevent

counterfeiting of documents, reflective materials for personal safety, window

films, cleaning and protection products for commercial establishments, roofing

granules for asphalt shingles, and fire protection products that help protect

against the spread of fire, smoke and toxic fumes.

Brands of 3M India Ltd

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Financials Results

12 Months Ended Profit & Loss Account (Standalone)

Value(Rs. in million) FY10A (12m) FY11E (12m) FY12E (12m)

Net Sales 10991.83 11761.26 12937.38

Other Income 76.06 83.67 92.03

Total Income 11067.89 11844.92 13029.42

Expenditure -9484.09 -9997.07 -11009.71

Operating Profit 1583.80 1847.85 2019.70

Interest -5.63 -10.80 -11.88

Gross Profit 1578.17 1837.05 2007.82

Depreciation -169.46 -164.00 -177.12

Profit before Tax 1408.71 1673.05 1830.70

Tax -480.34 -577.20 -631.59

Profit after Tax 928.37 1095.85 1199.11

Equity Capital 112.65 112.65 112.65

Reserves 4293.27 5389.12 6588.23

Face Value 10.00 10.00 10.00

Total No. of Shares 11.27 11.27 11.27

EPS 82.41 97.28 106.45

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Quarterly Ended Profit & Loss Account (Standalone)

Value(Rs. in million) 31-Mar-10 30-Jun-10 30-Sep-10 31-Dec-10E

Net Sales 2624.97 2904.19 2,956.57 3193.1

Other Income 45.47 15.78 10.63 11.06

Total Income 2670.44 2919.97 2,967.20 3204.15

Expenditure -2207.3 -2406.03 -2,584.02 -2730.1

Operating Profit 463.14 513.94 383.18 474.05

Interest -1.15 -1.14 -3.41 -3.48

Gross Profit 461.99 512.8 379.77 470.58

Depreciation -44.67 -35.9 -41.07 -38.05

Profit before Tax 417.32 476.9 338.7 432.52

Tax -138.48 -158.43 -113.45 -145.33

Profit after Tax 278.84 318.47 225.25 287.19

Equity Capital 112.65 112.65 112.65 112.65

Face Value 10.00 10.00 10.00 10.00

Total No. of Shares 11.27 11.27 11.27 11.27

EPS 24.75 28.27 20.00 25.49

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Key Ratios

Particulars FY10 FY11E FY12E

No of Shares 11.27 11.27 11.27

Market Price 3555.00 3555.00 3555.00

EPS (Rs.) 82.41 97.28 106.45

EBITDA Margin (%) 14.41% 15.71% 15.61%

PAT Margin (%) 8.45% 9.32% 9.27%

P/E Ratio (x) 43.14 36.54 33.40

ROE (%) 22.50% 21.01% 18.71%

ROCE (%) 42.50% 38.57% 34.28%

EV/EBITDA (x) 25.29 21.67 19.83

Debt-Equity Ratio 0.00 0.00 0.00

Book Value (Rs.) 391.12 488.40 594.84

P/BV 9.09 7.28 5.98

PBT Margin (%) 12.82% 14.23% 14.15%

1. Net Sales & PAT

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2. P/E Ratio

3. EV/EBDITA

13

4. P/BV

Outlook and Conclusion

At the current market price of Rs.3555.00, the stock is trading at 36.54 x

FY11E and 33.40 x FY12E respectively.

Price to Book Value of the stock is expected to be at 7.28 x and 5.98 x

respectively for FY11E and FY12E.

Earning per share (EPS) of the company for the earnings for FY11E and FY12E

is seen at Rs.97.28 and Rs.106.45 respectively.

On the basis of EV/EBITDA, the stock trades at 21.67 x for FY11E and 19.83 x

for FY12E.

We expect that the company will keep its growth story in the coming quarters

also. We recommend ‘BUY’ in this particular scrip with a target price of

Rs.4017.00 for Medium to Long term investment.

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Industry Overview

The global economic crisis that began in the latter part of the calendar year 2008

significantly impacted economic growth. The Indian Government took action and

managed the situation effectively, through a combination of financial stimulus

packages and strong economic policies.

Though the period January 1, 2009 to December 31, 2009 has been challenging with a

significant slowdown, your Company maintained top line at the same level during this

period last year, as a result of operational excellence, our localization efforts, our focus

on innovative R&D and working closely with our customers to provide solutions that

meet their specific requirement. Inflation, exchange fluctuations and general slowdown

continued to put tremendous pressure on our overall margins.

Increase in industrial production in the last quarter of the calendar year 2009 and

projected GDP growth in 2010-11 are signs of improvement in the Indian economy

OUTLOOK

Results for the period January 1, 2010 to March 31, 2010 indicate that the overall

outlook for our next accounting year April, 2010 to March, 2011 looks positive. The

appreciating rupee against all major currencies, recovery in the automotive sector,

higher industrial production, sustained investments in infrastructure by the State and

Central Governments & focus on health care, gives us confidence that India’s GDP will

continue to grow robustly in the future. Company will continue to focus on its

localization efforts, innovative R&D, the development of new customer segments and

the expansion of current market segments to secure competitive growth.

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________________ ____ _________________________ Disclaimer:

This document prepared by our research analysts does not constitute an offer or solicitation

for the purchase or sale of any financial instrument or as an official confirmation of any

transaction. The information contained herein is from publicly available data or other

sources believed to be reliable but do not represent that it is accurate or complete and it

should not be relied on as such. Firstcall India Equity Advisors Pvt. Ltd. or any of it’s

affiliates shall not be in any way responsible for any loss or damage that may arise to any

person from any inadvertent error in the information contained in this report. This document

is provide for assistance only and is not intended to be and must not alone be taken as the

basis for an investment decision.

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