3M India downgraded to 'Hold' by MarketsMOJO due to high valuation and average long-term growth

3M India, a diversified company in the largecap industry, has recently been downgraded to a 'Hold' by MarketsMOJO on 2024-08-19. This decision is based on various factors, including the company's high management efficiency with a ROE of 18.36% and a low Debt to Equity ratio of 0 times on average.

The company has also shown positive results for the last 13 consecutive quarters, with the highest operating cash flow of Rs 643.03 Cr and a 21.6% growth in PAT(Q). Technically, the stock is in a mildly bullish range, with multiple factors such as MACD, KST, DOW, and OBV indicating a bullish trend.

The majority shareholders of 3M India are the promoters, which can be seen as a positive sign for the company. However, the company has shown poor long-term growth with a 6.36% annual growth in Net Sales and a 2.94% growth in Operating profit over the last 5 years.

At a ROE of 27.2, the stock is currently trading at a very expensive valuation with a 18.7 Price to Book Value. However, it is currently trading at a discount compared to its average historical valuations. In the past year, the stock has generated a return of 22.28%, while its profits have only risen by 23.3%, resulting in a PEG ratio of 2.8.

In the last 1 year, the stock has underperformed the market, with a return of 22.28% compared to the market (BSE 500) returns of 37.46%. Based on these factors, MarketsMOJO has downgraded the stock to a 'Hold' and recommends investors to carefully consider their options before making any investment decisions.