Buy DOMS Industries; target of Rs 1825: ICICI Direct

ICICI Direct's research report on DOMS Industries

DOMS Industries (DOMS) has emerged as one of the strongest stationery and art products players in India with ~12% market share in FY23 from negligible share in FY10. Key reasons: (1) Product differentiation. It has introduced multiple value-added products after identifying gaps in the product offerings of other players, (2) strong investments in manufacturing and backward integration, (3) strategic partnership with FILA, which has helped DOMS in accessing global products, markets and augment R&D capabilities, (4) strong brand (Doms, C3) with a sub-segmentation strategy (Amariz, Fixy Fix) and (5) established distribution network of more than 0.12mn outlets. It also has the most diversified revenue stream vs peers (i.e. presence across all major sub-segments), indicating low product concentration risk.

Outlook

We model DOMS to report revenue/PAT CAGR of 24.4%/29% over FY24-26E. We note it has been steadily generating EVA over FY14-FY24E. We initiate coverage on the stock with BUY rating and DCFbased target price of INR 1,825 (implying 48x FY26E earnings).