IPO listed on 20 Dec'23
DOMS Industries Ltd
Minimum Investment
₹ 14,220 / 18 shares
Grey market premium
₹ 495 (63% premium)
Issue price
₹ 790
Listing price
₹ 1,400
% since launch
Listing on
Dec 20, 2023
Our Verdict:
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- DOMS Industries holds a prominent position in the Indian stationery and art material industry, offering an extensive product range that has fuelled its rapid business expansion. Over the last three years, the firm has exhibited impressive performance, evidenced by substantial increases in both revenue and profits.
- With a PE multiple of 32.4x on projected earnings for FY24, the issue seems fully priced. However, we believe the valuation is justified given the firm’s considerable market share, well-established distribution channels, capacity expansions, entry into new markets, and solid revenue and profit growth. Additionally, the grey market premium for the issue suggests a premium listing.
- Taking these elements into account, it is recommended for investors to consider subscribing to this offering from a medium-to-long term perspective.
About the company
Founded in
24 Oct'06
Managing director
Santosh Raveshia
- DOMS Industries Ltd specializes in designing, developing, manufacturing, and marketing an extensive array of stationery and art products. The firm has a significant presence, not only in the domestic market but also in more than 45 countries worldwide.
- They boast a diverse and extensive product portfolio, encompassing over 3,800 Stock Keeping Units (SKUs) as of September 30, 2023. Its range includes scholastic stationery, scholastic art materials, paper stationery, various kits and combos, office supplies, as well as hobby, craft, and fine art products.
STRENGTHS
- Market Dominance: As of fiscal 2023, DOMS holds a strong position as India's second-largest brand in stationery and art products, with ~12% market share by value. It leads in specific categories, with pencils and mathematical instrument boxes commanding market shares of 29% and 30% respectively.
- Robust Financial Growth: From FY21 to FY23, Revenue from Operations surged at a 73% Compound Annual Growth Rate (CAGR) and EBITDA increased at an impressive 149% CAGR. The firm saw a turnaround in FY22, turning a Rs 6 crore loss in FY21 into a Rs 17.14 crore profit, and further elevated its profit to Rs 102.9 crore in FY23.
- Increased Profitability: There was a substantial enhancement in operating margins, which rose from 10.2% in FY22 to 15.4% in FY23. Net profit margins also saw a significant boost, improving from 2.5% to 8.5%.
- Exceptional Returns: In FY23, DOMS achieved an outstanding Return on Equity of 33.5% and a Return on Capital Employed of 33.3%, outperforming many competitors.
- Investor-Friendly Company: The firm has demonstrated a strong dividend policy, distributing dividends of 1,500% for FY22 and 2,500% for FY23.
RISK FACTORS
- Reliance on Key Products: A significant portion of the firm’s Gross Product Sales comes from its main products, especially 'wooden pencils,' which alone contribute over 30% to total Gross Product Sales. A downturn in sales of these key products, particularly 'wooden pencils,' could negatively influence the company's business performance and financial stability.
- Dependence on the FILA Group: The firm relies heavily on the FILA Group, particularly for export sales, which represent more than 59% of its total exports. If FILA stops being a key promoter, it could harm the business operations, research and development, and export capabilities. Additionally, any harm to FILA Group's reputation could adversely affect the firm’s overall business health and financial outcomes.
- Dependency on Raw Material Prices: The industry's production costs and profit margins are significantly influenced by the prices of raw materials, which constitute a large part of overall production expenses. Key materials such as plastic, paper, and pigments have shown price volatility in recent years. The intense competition in the market might prevent the firm from transferring the increased costs of raw materials to the customers.
- Cash Flow Concerns: The firm has experienced negative cash flows in past financial years. Sustained negative cash flows or substantial negative cash flows in the short term could adversely affect its operational capabilities and its plans for growth.
Issue details
Issue type
Mainstream
Issue size
₹ 1,200 crore
Fresh Issue
₹ 350 crore
OFS
₹ 850 crore
Price range
₹ 750 - 790
Lot size
18 shares
Issue Objective
The company intends to utilise the proceeds from the net issue to:
- Partly finance the cost of establishing a new manufacturing facility to expand its production capabilities for a wide range of writing instruments, watercolour pens, markers, and highlighters; and
- General corporate purposes.
Dates
Bidding open
13 Dec'23
Bidding close
15 Dec'23
Allotment date
18 Dec'23
Refund date
19 Dec'23
Listing
20 Dec'23
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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