Another Stationery IPO: DOMS Industries Ltd.
Friday, Dec 15, 2023
IPO Insights: DOMS Industries Limited
DOMS Industries, one of India's leading stationery and art product manufacturers, is all set for an initial public offering to raise funds for further expansion. Founded in 2006, DOMS has grown to capture a 12% market share in the domestic branded segment. It sells products under its flagship DOMS brand across 45+ countries.
Through the IPO, DOMS Industries now looks to broaden its manufacturing footprint, invest in new product development, and strengthen international distribution. As the second largest player in its domain, DOMS is well-positioned to scale its operations. Market analysts view the IPO as a major milestone for the company marking 15 successful years in business.
IPO Outlook and Offer Details
DOMS Industries, one of the leading players in India's stationery and art products market, is launching its initial public offering (IPO) to raise funds from public investors. Through this IPO, the company aims to raise Rs. 1,200 crore by offering shares in the price band of Rs. 750 to Rs. 790 per share.
The IPO comprises a fresh issue of Rs. 350 crore worth of new shares and an offer for sale of Rs. 850 crore by existing shareholders including promoters. Investors can bid for a minimum of 18 shares and in multiples thereof. A majority 75% of the issue size is reserved for qualified institutional buyers, while 15% is for non-institutional investors and the remaining 10% for retail investors. At the upper price band, DOMS Industries will have a post-issue market capitalization of Rs. 4,793 crore.
DOMS Industries IPO subscription status is 78.59 times as of 15th December, 2023. DOMS IPO retail investors portion has been subscribed 66.01 times, the NII portion has been subscribed 64.84 times, and the Qualified Institutional Buyers (QIB) portion is booked 90.46 times. The employee portion was subscribed 26.93 times with a grey market premium of 67%.
Product Portfolio & Brands
DOMS offers consumers a wide range of well-designed stationery and art material products that are classified into seven categories to suit various needs. These include scholastic and office stationery, art supplies for students and professionals as well as paper stationery, do-it-yourself kits, hobby products, and fine art items. The company markets these products through its flagship brand 'DOMS' as well as sub-brands like 'C3', 'Amariz', and 'Fixyfix'.
Catering to students and professionals, DOMS ensures quality in its diverse selection of pens, pencils, colors, brushes, papers, notebooks, and other stationery. DOMS' largest revenue is generated from wooden pencils, accounting for over 32% of its total income. The comprehensive variety of products is designed to meet the different interests and requirements of consumers.
Peer Comparison
DOMS Industries is coming up with its IPO with a strong financial track record. The company has posted an EPS of Rs. 18.29 for FY24, which is significantly higher than the industry average. Its NAV per share of Rs. 59.99 is also above industry levels and places it second amongst peers, just behind Linc Limited.
Despite healthy earnings, DOMS Industries is entering the market at a relatively modest premium seeking a PE multiple of 43 times based on last fiscal's EPS. This slight premium can be attributed to its impressive growth over the last 3 years, where both the top line and bottom line have expanded steadily. Furthermore, the company has the highest return on net worth in its industry at a healthy 28.39% for FY24. This underlines the financial strength and operating efficiency of DOMS Industries.
Company’s Financials
Currently, DOMS Industries operates a network of 11 manufacturing facilities. Its 2 largest plants located in Gujarat and Jammu & Kashmir contribute over 60% to total manufacturing output. Through the distribution network of 100+ super-stockists and 3,750 distributors, the products reach more than 115,000 retail counters across India.
The dedicated sales team of 450 members handles on-ground operations. In FY24, the company sold products worth Rs. 390 crore to domestic customers. Its top-selling pencils and mathematical boxes categories accounted for 32% and 25% of this revenue respectively. Pencils alone saw sales of Rs. 125 crore marking a 15% growth over the previous year.
Future Outlook
The company plans to utilize Rs. 350 crore (i.e. 30% of the total IPO size) from the fresh issue solely for setting up a new manufacturing facility. This new plant will have an estimated annual production capacity of 250 crore units across its top 5 categories which currently make up 70% of total sales. These funds will help DOMS Industries scale up its manufacturing by 50% over the next 3 fiscal years.
With the existing 12% market share, management targets to gain at least a 5% additional share by FY26. This will be achieved through expanding the product portfolio from 3,770 to over 5,000 Stock Keeping Units and increasing its domestic retail footprint to more than 160,000 outlets across 3,800 towns.
Share this post on social media: