DOMS Industries Limited IPO – Get Date, Price, Review and Details

In this article, we will discuss:

• About the company
• The objective of the fresh issue
• Key Strengths and Opportunities
• Risks
• Financial Snapshot
• Conclusion

About the company:

Doms Industries specializes in the design, development, manufacturing, and global distribution of a diverse range of stationery and art products, prominently marketed under the flagship brand DOMS. It is the second largest player in India’s branded stationery and art products market, with a market share of approximately 12%, as of Fiscal 2023. The company’s keen focus on research and development (R&D), product engineering, and backward integrated manufacturing, operations, combined with its multichannel pan-India distribution network has enabled it to achieve a strong brand recall amongst consumers. Doms Industries offers meticulously crafted and high-quality stationery and art materials across seven distinct categories: scholastic stationery, scholastic art material, paper stationery, kits and combos, office supplies, hobby and craft, and fine art products. It undertakes manufacturing operations from facilities located in Umbergaon, Gujarat, and Bari Brahma, in Jammu and Kashmir. As of September 30, 2023, its extensive multi-channel distribution network extends across the globe, reaching over 45 countries in America, Africa, Asia Pacific, Europe, and the Middle East. Within the domestic market, the company employs a diversified sales approach, reaching consumers through general trade, modern trade, and e-commerce, as well as original equipment manufacturers (OEM) and institutions.

The objective of the fresh issue:

The company intends to utilize the net proceeds received from the fresh issue towards:

• Proposing to partly finance the cost of establishing a new manufacturing facility to expand its production capabilities for a wide range of writing instruments, watercolor pens, markers, and highlighters.
• General corporate purposes.

Key Strengths and Opportunities:

• DOMS Industries is amongst the few ‘stationery and art material’ products manufacturing and marketing companies globally with such a wide product breadth. It is the fastest growing ‘stationery and art material’ products company in India in terms of revenue over the period from Fiscal 2020 to Fiscal 2023. The core products such as ‘pencils’ and ‘mathematical instrument boxes’ enjoy high market shares of 29% and 30% by value in Fiscal 2023 respectively.
• The company undertakes end-to-end operations, from conceptualization to design, manufacturing, packaging, and distribution of its product portfolio through the integrated operations at Umbergaon Manufacturing Facilities which is built for large-scale operations. The facilities and storage depots are also strategically located to achieve shorter time to market, and greater cost competitiveness. It has backward integrated its manufacturing process by producing several key components and materials used in the manufacturing of finished goods.
• FILA, the Company’s Corporate Promoter, is an Italy-based leading global enterprise devoted to the research, design, manufacture, and sale of tools for creative expression, catering to millions of homes, schools, offices, and ateliers. The company’s collaboration with FILA has helped it expand its international footprint in Asia Pacific, Europe, and Middle Eastern markets with the distribution of its products. The knowledge sharing with FILA has allowed the company to augment its R&D capabilities, and remain updated with emerging global trends and technology.

Risks:

• A significant portion of the company’s gross product sales is attributable to the sale of wooden pencils. Any decline in the gross product sales of its key products in general or specifically “wooden pencils” could have an adverse effect on its business, results of operations, and financial condition.
• DOMS Industries is dependent on its general trade distribution network for more than 70% of its gross product sales in each of the last three Fiscals and the six months ended September 30, 2023. Failure to manage the distribution network efficiently could have an adverse impact on its business, results of operations, and financial condition.
• There is an outstanding civil suit that has been filed against the Company by one of the listed peers, Kokuyo Camlin Limited (“Camlin”). Camlin filed a civil suit against DOMS Industries about an alleged infringement and/ or passing off of certain designs concerning mathematical instrument boxes, compasses, and dividers which are registered in the name of Camlin. An adverse judgment could have an adverse impact on DOMS Industries’ business, financial condition, results of operations, and future cash flows.
• DOMS Industries has a synergetic relationship with FILA. Any deterioration in the relationship with the FILA Group may have a material impact on its business operations, R&D, and export capabilities of the company.

Financial Snapshot:

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Conclusion:

DOMS Industries has the widest breadth of product categories amongst its peers in India. It has displayed robust revenue, EBITDA, and PAT growth. DOMS Industries comes at an earnings valuation of 43x based on its earnings per share (EPS) as of March 31, 2023, and the upper price band. In comparison, its listed peers, such as Kokuyo Camlin, Linc, Navneet Education, and Flair exhibit PE ratios of 39x, 26x, 27x, and 34x respectively as of December 11, 2023.

Given these factors, we advise our investors to consider subscribing to the DOMS Industries Limited IPO solely for potential listing gains.