JM Financial initiates buy on this recent D-Street debutant; stock has gained 78% since listing

DOMS share price: After splendid gains to the tune of 78 per cent in less than three months since listing on December 20, 2023, the domestic brokerage JM Financial has initiated its buy call on DOMS, the country's second-largest stationary player. The target price set by the domestic brokerage is Rs 1,710, signifying an upside potential of 22 per cent.
 
Three key reasons why the brokerage has turned bullish on the counter are as below:
 
Magnificent journey led by an experienced leadership team: The report highlighted that success in the stationery market requires product innovation, product range, and design, and the company meets these by “being pioneers through innovation in core categories, scaling it up, and owning end-to-end manufacturing," which has been instrumental in crafting the winning script.
 
A focused approach to offering distinct offerings: The company's strong R&D and integrated manufacturing infrastructure enable economies of scale, better quality, and competitive pricing.
 
Strong outperformance leads to visibility of benefits: Over FY15–23, DOMS’ sales have grown at 22% CAGR, sharply ahead of the 6 CAGR of the Indian stationery industry (non-paper stationery grew at 11% CAGR). DOMS has also outperformed peers like Hindustan Pencils and Camlin in terms of revenue as well as profitability. With the addition of new capacities (capex of c.INR 2bn+ p.a. in FY25/26E), scale-up in adjacent categories, and leveraging relationships with FILA to tap large export opportunities, the brokerage expects DOMS' outperformance to continue.
 
DOMS, despite being a late entrant, garnered a formidable 29 per cent / 30 per cent value market share, primarily on account of differentiated products and giving better value for money to consumers.
 
Shares of the company were listed on December 20 at a premium of 77 per cent over the IPO issue price of Rs 790 per share and since then have traded in a range.
 
DOMS Industries' total revenue as of the December-ended quarter was at Rs 373.7 crore, while net profit for the quarter came in at Rs 37.3 crore. The company is a market leader in the segment.
 
Two of the analysts have given a consensus buy call on the stock with a 1-year price target of Rs 1700 per share.
 
DOMS Industries is primarily engaged in the manufacturing, marketing, trading, and distribution of school stationery and art materials under the brand names DOMS and C3.