DOMS Industries shares double investors’ money this year; use corrections to buy the stock, suggest analyst

In just over 8 months, DOMS Industries share price has surged by 219% from its initial public offering (IPO) price of ₹790. DOMS Industries share price debuted on the stock exchanges on December 20, 2023, at ₹1,400, representing a 77.2% increase from the issue price of ₹790. The stock price has been steadily increasing and has risen by 90% from its listing closing price of ₹1,326.05. DOMS Industries share price opened at ₹2,495 apiece on BSE, the stock touched an intraday high of ₹2,516.15, and an intraday low of ₹2,488.65.

According to Rajesh Bhosale, Equity Technical and Derivative Analyst at Angel One, DOMS Industries share prices have witnessed a correction this week, and today they are trading in a narrow range with low volumes. The stock has next support around ₹2,400 where a fresh buying could emerge, whereas on the upside, ₹2,650- 2,700 remains a selling zone.

DOMS Industries is recognised as a leading manufacturer of stationery and art supplies in India, offering a diverse range of exquisitely crafted stationery and art products. The company markets its products under various brands such as FixyFix, C3, and Amariz, in addition to its main brand "DOMS." Its multi-channel distribution network covers over 50 countries worldwide, spanning across the US, Africa, Asia Pacific, Europe, and the Middle East. On a national level, the company's products are available in all of India's 29 states and union territories.

In early August, the company announced its Q1FY25 results. According to an exchange filing, the company's revenue from operations in Q1 FY25 increased by 17.3% to ₹445.0 crores compared to Q1FY24 and by 10.2% compared to the previous quarter, Q4FY24.

The Q1FY25 profit after taxes (PAT) of the company increased by 49.5% to ₹54.3 crores compared to Q1FY24, and by 15.7% compared to Q4FY24. In Q1FY25, the PAT margin rose to 12.2% compared to 9.6% in Q1FY24 and 11.6% in Q4FY24.

Should you buy?

In a recent research, brokerage JM Financial recommended buying the stock, witha targetprice of ₹2,750. According to the brokerage's report, it is still confident in DOMS's execution skills, core business strengths, and TAM expansion initiatives (e.g., launching products with disruptive pricing (Markers, Adhesives, Pens, Geometry Box), collaborating with Clapjoy, launching the Tots range). These initiatives, when combined with capacity additions, will help DOMS grow faster than its competitors and the industry.

“Any sharp corrections should be used as opportunity to add in the name,” the brokerage said.

Nevertheless, the brokerage stated that DOMS's main challenge was to increase its distribution reach because, in comparison to other consumer categories, the coverage universe for stationery (around 300k, of which DOMS covers 125k) is very small. Obtaining shelf space and expanding in non-stationery stores is also challenging due to the low ticket size of stationery items.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.