Target: ₹2,845
CMP: ₹2,408
DOMS’ FY25 consol sales grew by 25 per cent with organic sales growth of 17 per cent (tad lower vs its guidance of 18-20 per cent). However, this was predominantly driven by capacity constraints (no major capacity addition happened in scholastic stationary/art material in FY25 & some delay in construction activities) and demand has not been a challenge.
With the addition of lines (for pens, pencil processing, paper stationery, etc.) in existing infrastructure and new greenfield capacities coming up from the end of FY26, the supply-side challenges should ease. Apart, DOMS has been widening its portfolio (launch of back-to-school range, DOMS tots range, adhesives, fine arts, paper stationery), which we believe should enable it to achieve organic revenue growth guidance of 18-20 per cent p.a. over the medium term.
Going ahead, the pace of commissioning of new capacities will be key for acceleration in writing instruments. Execution on Paper Stationery & Uniclan business (distribution expansion) over the medium term will be another key monitorable. We like the DOMS brand strength, R&D capabilities, fully backwards-integrated manufacturing setup and promoter’s ability to leverage these tools to create new growth engines and get product & pricing right. This, we believe, will enable it to continue outperforming industry growth. Sharp correction in the name should be used as an opportunity to add.