The quarter marks a strong inflection point as cyclical tailwinds in autos, GST-related benefits and government-led infrastructure could help 3M sustain growth momentum in H2 FY26 as well. Favourable base of H2 FY25 will also aid.
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ICICI Securities Report
3M India Ltd. delivered a stellar Q2 FY26 performance with revenue growth of 14% YoY to ~Rs 12.7 billion, led by broad-based growth across all four verticals. Takeaways:
It reported highest-ever gross and Ebitda margins in Q2 FY26 led by improved product mix.
Margin expansion was robust, with gross/Ebitda/PAT margin improving by 487/370/306bps YoY, aided by higher utilisation, cost efficiencies and improved pricing discipline.
Safety and industrials segment reported strong Ebit growth of 95.5% YoY led by improved product mix and low base.
We believe the quarter marks a strong inflection point as cyclical tailwinds in autos, GST-related benefits and government-led infrastructure could help the company sustain growth momentum in H2 FY26 as well. Favourable base of H2 FY25 will also aid.
We raise FY26/27E earnings by 4.1%/2.2% to factor in Q2 FY26 result, potential auto demand recovery and increase in government-led infrastructure spending.
We maintain Buy with DCF-based revised target price of Rs 35,700 (earlier Rs 35,610); implied P/E works out to 49x FY28E EPS.
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