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DOMS Industries IPO: 5 Things to Know

Dec 5, 2023

DOMS Industries IPO: 5 Things to Know

The primary market recorded some bumper listings on both the mainboard and small-medium enterprise (SME) segment last month.

Tata Technologies, and Gandhar Oil Refinery kept investors engaged with subscriptions.

The third quarter of 2023 saw a staggering 21 IPOs in the Indian market, compared to just four in the same quarter of 2022.

The proceeds raised during Q3 2023 amounted to US$ 1,770 million (m) (Rs 147.6 bn), a significant increase of 376% compared to US$ 372 m in Q3 2022.

After an active November, the month of December is also going to witness a few new IPOs.

One among them is the IPO of DOMS Industries.

Here are the key details of the IPO.

Issue period: 13 December 2023 to 15 December 2023

Type of issue: Book Built Issue

Price band: Rs 750 to Rs 790 per share

Face value: Rs 10 per equity share

Lot size: 18 shares

Application limit: 14 lots for retail investors

Tentative IPO allotment date: 18 December 2023

Tentative listing date: 20 December 2023

#1 About DOMS Industries

The company has marked its presence in over 40 countries.

The company offers well-designed and high-quality stationery and art materials to consumers, which are classified into seven categories: scholastic stationery, scholastic art materials, paper stationery, kits and combos, office supplies, hobby and craft, and fine art products.

The company has an exclusive tie-up with certain entities of the FILA Group for the distribution and marketing of their products in South Asia.

#2 A Look at the Financials

The company's revenue has grown at a CAGR of 43.8% in the last three years, while the company has turned profitable.

This was due to growing demand for high-quality stationery products and increased expansion into new markets.

For the financial year 2023, the company reported a 76.8% YoY jump in revenue to Rs 12.2 bn driven by new products.

The net profit also rose sharply to Rs 1.1 bn, up 500% from the net profit of Rs 171.4 m reported a year back.

DOMS Industries Snapshot (2021-23)

Particulars 31-Mar-21 31-Mar-22 31-Mar-23
Revenues from Operations (Rs in bn) 4.1 6.9 12.2
Revenue Growth (%) - 68.3 76.8
Net Profit (Rs in m) -60.3 171.4 1,028.70
Net Worth (Rs in bn) 2.3 2.5 3.4
Data Source: Company's Red Herring Prospectus (RHP)

Going forward, the company's goal is to enhance its income introducing new product range and expanding its distribution channels.

#3 Peer comparison

As per the company's red herring prospectus, the following are industry peers of DOMS Industries.

Peer Comparison

Company Total Income (2023) EPS (Basic) (in Rs) Return on Net Worth (%)
DOMS Industries 12.1 18.3 28.4
Kokuyo Camlin 7.7 2.4 9.3
Linc 4.9 25.2 21.1
Pidilite Industries 117.9 25 17.7
Data Source: Company's Red Herring Prospectus (RHP)

#4 Arguments in Favour of the Business

  • The company holds a leadership position in the Indian stationery and art material industry, boasting the most comprehensive range of products. This market dominance positions the business as a go-to provider for consumers seeking diverse and high-quality stationery and art supplies.
  • Established brand recognition, fuelled by superior quality, innovation, and unique product offerings, has fostered rapid business expansion and plays a pivotal role in sustaining a loyal customer base.
  • The company boasts a world-class manufacturing infrastructure, placing a strategic emphasis on backward integration. This approach enhances operational efficiencies and ensures control over the entire production process.
  • With a robust multi-channel distribution network, the company enjoys a widespread presence across India and international markets. 
  • Through a strategic partnership with FILA, the company gains not only access to international markets but also taps into valuable product know-how. This collaboration strengthens its global presence and enriches its product offerings with insights from a renowned global partner.

#5 Risk Factors

  • A substantial portion (about 60%) of its gross product sales in the past three fiscal years is attributed to key products, with wooden pencils alone contributing over 30% in fiscal 2023. Any decline in the sales of these key products, especially wooden pencils, may negatively impact business, financial condition, and operational results.
  • With more than 70% of gross product sales dependent on the general trade distribution network, effective management is crucial. Failure to efficiently manage this network could present a risk to the company's overall operations.
  • Deterioration of the brand image, coupled with the presence of look-alikes and counterfeit products in the domestic market, could negatively impact the company's goodwill and operational results.
  • The company faces a risk of depletion of natural resources, considering some raw materials are natural. The lack of formal contracts with suppliers and dependence on a limited number of them for specific raw materials pose challenges to the company's procurement process.

Conclusion

DOMS Industries' current strategies involve targeting new customers and expanding existing accounts, with plans to deepen their geographical footprint in select South East Asian countries and the African continent. These strategies may encompass future expansion into markets with high entry barriers.

The company also aims to streamline operations and augment manufacturing capacity for writing instrument products by adding approximately 0.20 million square feet to the Umbergaon manufacturing facilities.

The focus remains on integrating operations, capitalising on economies of scale, and improving operating margins.

With a widespread multi-channel distribution network boasting a robust pan-India presence, the company is committed to developing and expanding its distribution channels.

This includes reinforcing and expanding the network of distribution channel partners and increasing presence across various retail store formats, beyond traditional stationery stores.

This could bolster the company's performance going forward.

Like any investment opportunity, DOMS Industries bears its own set of advantages and disadvantages.

Therefore, one should conduct thorough research before applying for an IPO. The big-ticket IPOs like Tata Tech are already done and dusted so who knows... the subscription figures for upcoming IPOs could be lower.

For more information on IPOs, check out the list of upcoming IPO's.

Investment in securities market are subject to market risks. Read all the related documents carefully before investing

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