Buy DOMS Industries; target of Rs 3370: Prabhudas Lilladher

Prabhudas Lilladher's research report on DOMS Industries

DOMS reported strong performance in 3QFY25 with revenue/PAT beat of 4%/8% respectively led by good show in the hygiene business. Revenues from Uniclan Healthcare (hygiene business subsidiary) stood at ~Rs501mn with an EBITDA margin of ~10%. As the third line has commenced production, installed capacity has increased to 650mn pieces per annum. Given the capacity expansion, we expect hygiene business to provide an additional growth fillip in FY26E. Even core stationary business is on a steady growth path with ongoing expansion in pens and pencils. Progress over the new development plan on 44- acres land parcel at Umbergaon is on track and the first building is expected to be ready by 3QFY26E. Led by the ongoing expansion of product basket and distribution network, we expect sales and PAT CAGR of 27% over FY25EFY27E.

Outlook

We have marginally increased our EPS estimates by ~1-4% over FY25EFY27E amid strong performance in 3QFY25 and retain BUY on the stock with a TP of Rs3,370 (60x FY27E EPS; no change in target multiple).

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