Your Complete Guide to the DOMS IPO
How much money can pencils make? Well, possibly A LOT if DOMS Industries has anything to say about it!
DOMS Industries Limited, India’s second-largest player in stationery and art supplies, is all set for its initial public offering on 13th December 2023. The company aims to raise INR 1,200 crore via this IPO, with the floor price at 75 times and the cap price at 79 times the face value of the equity shares! So, should you consider subscribing? Here’s all you need to know before investing.
🏦 About DOMS Industries Limited
Founded on 24th October 2006, DOMS Industries designs develops, manufactures, and sells a wide range of ‘stationery and art’ products under the brand name ‘Doms’.
As of 2023, it is India’s second largest stationery player with approximately 12% market share domestically, with 29% and 30% market share, respectively, for its core products of pencils and mathematical instrument boxes. It also has a presence in over 40 countries internationally.
💰 How are their Financials?
- DOMS Industries Limited’s revenue increased by 77.28%, and profit after tax (PAT) rose by 500.18% between FY22 and FY23.
- However, the company’s revenue from operations fell 41% YoY to INR 403 crore in the financial year 2023. It also sustained a loss of INR 6 crore in the same period.
- According to reports, it has marked tremendous growth since FY23, which indicates
- its prospects.
⚠️ What are the details of the DOMS IPO?
| IPO Dates | 13th December 2023 to 15th December 2023 |
| Face value | ₹10 per equity share |
| Price band | ₹750 to ₹790 per share |
| Lot Size | 18 Shares |
| Total Issue Size | 15,189,873 shares |
| Minimum Investment | ₹13,500 |
| Listing on | BSE and NSE |
| Offer for sale | Fresh Issue of ₹350 Cr (OFS: ₹850 Cr) |
| Registrar | Link Intime India Private Ltd. |
⚖️ What does the offer breakup look like?
| Qualified Institutional Bidders (QIB) | 75% |
| Non-Institutional Bidders (NIB) | 15% |
| Retail | 10% |
✅What makes DOMS a good investment?
- Market Share: DOMS Industries’ market share of 12% by value is a big tick in the ‘pro’ column.
- Products: DOMS has a wide range of product categories, including educational stationery and art materials, paper stationery, kits and combos, office supplies, hobby and craft, and fine art products, with over 3,800 SKUs as of September 2023.
- Facilities: The company operates 13 manufacturing facilities in Gujarat, covering 34 acres of land, and is one of India’s most extensive stationery manufacturing facilities. It also has a facility in Bari Brahmana in Jammu and Kashmir. Plus, it has 7 warehouses, 3 depots, 120 super stockists and over 4,000 distributors across all country states.
- Exports: Since 2021, the company has engaged in direct product exports yielding INR 636.66 crore.
Partnership: The company has an exclusive tie-up with the FILA Group to distribute and market its products in the Asia Pacific, Europe, and the Middle East.
🚨What should you beware of?
- Reliance of Key Products: A significant portion of DOMS’ gross product sales, approximately 60%, is from selling essential products. Wooden pencils, in particular, make up about 33%. If the quality and sales of these products diminish, it will impact financial performance.
- Distribution: DOMS relies heavily on its general trade distribution network, contributing to 70% of its gross product sales. The company’s financial health greatly depends on this network’s health and efficient management.
- Suppliers: The company depends on limited suppliers for its raw materials; if these relationships are impacted or DOMS fails to procure the materials on favourable terms, it will affect business.
- Cashflow: The company has shown negative cash flow in the previous financial years. If this trend continues, it will adversely affect operations.
- Debt: DOMS’ total borrowings are INR 152.72 crore as of October 2023. The company also has an unsecured loan of INR 50 crore from Axis Bank Limited as of the same period.
⏩️What is DOMS’ vision for the future?
The company plans to use the funds raised from the public issue to pay for general corporate purposes and the cost of building a new manufacturing facility to increase production capacity for various writing instruments, watercolour pens, markers and highlighters.
🧠 Our Final Thoughts
Ahead of the IPO launch on 13th December, the shares of DOM Industries are trading with a grey market premium of nearly 60% over the price band. The shares have been in heavy demand in the unlisted market since the announcement of the IPO. With this positive market sentiment, medium to long-term investors should consider subscribing!
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