DOMS Industries IPO: Should you subscribe to Rs 1,200 crore issue?

Stationery and art product maker DOMS Industries is pencilling in slightly slower revenue growth of 20-25 percent for the current financial year, which it expects to normalise at roughly around Rs 1,500 crore.

DOMS Industries IPO is set to open on December 13. The price band of the Rs 1,200 crore public offer is fixed at Rs 750-790 per share. Most analysts have assigned a subscribe rating to the issue owing to the strong brand presence, decent financials and established international partnerships.

The offer, which will conclude on December 15, consists of a fresh issue of 44.3 lakh shares worth Rs 350 crore and an offer-for-sale of 1.07 crore shares. FILA- Fabbrica Italiana Lapised Affini SpA, the corporate promoter, will offload Rs 800 crore worth of shares. The average cost of acquisition of these shares was Rs 101.53 each. While promoters Sanjay Mansukhlal Rajani and Ketan Mansukhlal Rajani will sell Rs 25 crore worth of shares each in the OFS.

By planning for a high utilization rate and with the commissioning of additional capacities, DOMS strives to continue reducing its cost of production and achieve economies of scale. “The company recently entered the European market by introducing its DOMS-branded products in Italy; the high quality of its products could help generate significant sales from European countries,” said Unnati Jadhav, Research Analyst at KR Choksey Research.

Also Read: Doms Industries IPO: 10 things to know before subscribing to Rs 1,200 crore issue

Should you subscribe to DOMS India IPO?

Choice: Subscribe With Caution

“At a higher price band, DOMS is demanding a P/E multiple of 50x (to its FY23 EPS of Rs 15.8), which is at a significant premium to the peer average. Considering valuation only as a concern, we assign a ‘subscribe with caution’ rating for the issue,” said analysts at Choice Equity Broking.

Anand Rathi: Subscribe For Long Term

DOMS Industries has a leadership position in the Indian ‘stationery and art material’ industry with the widest range of products, driving rapid business growth. The company focuses on backward integration to drive efficiencies and also has a strategic partnership with FILA enabling access to global markets and product know-how.

“We believe that the valuation of the company is fairly priced and recommend a ‘subscribe long term’ rating to the IPO.,” said analysts at Anand Rathi.

Mehta Equities: Subscribe

DOMS’ robust multi-channel distribution network and collaboration with FILA have not only brought international quality to Indian consumers but have also given a global footprint for future growth in the export segment.

“We like the company's commitment towards product quality, innovation and pricing strategy in the segment with a high-growth target audience. We also see the strong brand presence and multi-SKUs bringing sustainable growth in the long run. Hence, considering all the parameters and market momentum, we recommend investors ‘Subscribe’ to the issue,” said Rajan Shinde, Research Analyst at Mehta Equities.

Also Read: India Shelter Finance IPO: 10 things to know before subscribing to Rs 1,200 crore issue

KR Choksey: Subscribe

“At the upper end of the price band, the Company’s P/E is 43.2x which is higher than the industry average of 36.0x. We believe the premium is justified given the Company’s robust market share, established distribution network, expansion of capacities and venturing into new markets, and strong revenue growth and profitability. We recommend a ‘SUBSCRIBE’ rating on the IPO,” said Unnati Jadhav, Research Analyst at KR Choksey Research

StoxBox: Subscribe For Listing Gains

DOMS has demonstrated commendable performance over the past three years, marked by significant growth in revenue and profitability. “The issue seems to be fully priced at a P/E multiple of around 30x annualized FY24 earnings and advises investors to subscribe to the issue for the benefit of listing gains,” said Dhruv Mudaraddi, Research Analyst, StoxBox.

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