JM Financial initiates coverage on DOMS Industries with 'buy' call; sees 19.5% upside

JM Financial on DOMS Industries: Brokerage firm JM Financial has initiated coverage on stationery products manufacturer, DOMS Industries, with a 'buy' call, projecting a notable 19.5 per cent upside potential. 

The company's journey is hailed as an exemplary tale of industry evolution and sustained innovation, underpinned by a consumer-centric approach, analysts noted. Founded in 1973 by visionary entrepreneurs, DOMS Industries initially catered to the B2B segment in the stationery market. 

Over time, it strategically diversified its portfolio, ventured into its own brand, and emerged as a key player in India's stationery industry. Led by second-generation promoters, DOMS capitalised on its platform, forged partnerships, and expanded its presence across seven categories with over 3,800 stock keeping units (SKUs).

Central to DOMS' success is its unwavering commitment to innovation and end-to-end manufacturing capabilities, ensuring competitive pricing and superior quality. The approach has enabled DOMS to carve a niche for itself, particularly in core categories like pencils and mathematical instruments, where it achieved notable market share despite facing established competitors, brokerage firm said in a note

Under the leadership of Santosh Raveshia, DOMS prioritises consumer feedback and focuses on refining its products and pricing strategies. With a robust research and development (R&D) infrastructure and integrated manufacturing facilities, DOMS has consistently outperformed the industry and its peers, registering impressive sales growth and profitability.

DOMS plans to further expand its capacities, explore adjacent categories, and leverage its partnership with FILA to tap into lucrative export opportunities, the brokerage firm highlighted. 

Considering these factors, JM Financial forecasts a strong earnings growth trajectory for DOMS, estimating a sales and profit after tax (PAT) and compound annual growth rate (CAGR) of 25 per cent and 34 per cent respectively over financial year 2023-2026 estimate (FY23-26E). Therefore, given its strong performance and promising outlook, the brokerage has set a target price of Rs 1,710.

As of 11:30 am, shares of DOMS Industries were trading a little over 2 per cent higher at Rs 1,430 per share.