₹220 to ₹23,919: Debt-free multibagger stock turns ₹1 lakh to ₹1 Cr

Market


A large-cap company with a market valuation of 26,945.65 crore, 3M India Ltd. operates in the diversified industry. Abrasives, adhesives, sealants, and fillers, advanced materials, automotive parts and hardware, building supplies, cleaning supplies, coatings, compounds, and polishes, dental and orthodontics, lab supplies and testing, labels, lubricants, personal protective equipment, office supplies, signage & marking, tapes, and tool manufacturing are among the products produced by 3M India Limited. According to Value Research’s statistics, 3M India Ltd. is a debt-free company, but what could sound more intriguing to potential investors is that 3M India is one of the multibagger stocks that have turned investors’ lakhpati to crorepati over the course of a long-term investment.

Share price history of 3M India

The shares of 3M India ended Friday’s trading session on the BSE at 23,919.65 a piece, up 4.50% from the previous close of 22,890.10. The total volume recorded by the stock was 1,188 shares lower than the 20-Day average volume of 286 shares. The stock price has gone up dramatically from 220 on July 11, 1997 to the current market price, logging a multibagger return and an all-time high of 10,772.57%; as a result, if an investor had invested 1 lakh in the stock 25 years ago, the amount would now have grown to 1.08 Cr. 

The stock has gained 64.12% in the previous five years, but it has fallen 4.72% in the last year. The stock has declined 7.30% year-to-date (YTD) in 2022. On the BSE the stock had touched a 52-week-high of 27,800.00 on (08/11/2021) and a 52-week-low of 17,300.00 on (27/05/2022), indicating that at the current market price the stock is trading 13.95% below the high and 38.26% above the low. The stock was trading above the 5 days, 10 days, 20 days, 50 days, 100 days, and 200-day Exponential Moving Average (EMA) as of Friday’s close indicating a strong price movement is expected in the near term. 

The RSI indicator value for 3M India Limited as of 16/09/2022 was 66.61, suggesting that the stock is neither in an overbought nor oversold condition. The stock is currently trading at a P/B ratio of 12.35, PE of 82.68x and EV/EBITDA of 53.05x making it an overvalued stock when compared to its peers such as Quess Corp Ltd, Bombay Burmah Trading Corporation, Nava Ltd, Balmer Lawrie & Company Ltd.

Should you buy the shares of 3M India?

On Thursday, the research analysts of the broking firm ICICI Securities said in their note that “3M India’s FY22 annual report highlights the following: (1) Company is expanding its local manufacturing capacity for respirators, masks, hand sanitisers, etc; it will also supply industry consumables to mobile phone manufacturing companies availing the PLI schemes. (2) 3M India is steadily investing in increasing its offline and online reach for Scotch Brite. (3) It introduced four products in automotive and consumer segments. We expect launch of additional products in tandem with normalisation of the economy. (4) Royalty as a percentage of sales reduced from 5.3% in FY21 to 5.2% in FY22. We remain positive on 3M India due to its competitive advantages such as: (1) strong brands, (2) established distribution network, and global relationships with large manufacturers, and (3) access to parent’s technology pool.”

They further added that “We model 3M India to report revenue and PAT CAGRs of 16.6% and 39.4% respectively over FY22-FY24E with steady improvement in RoE. Maintain BUY with a DCF-based target price of Rs26,500. Key risks: prolonged weakness in the economy, and failure of new products.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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