New product lines, capacities to support DOMS’ growth

ET Intelligence Group: DOMS Industries, a writing devices and stationery provider, has proven resilience on bourses amid heightened market volatility with an 8% acquire since February 3 when it declared the third quarter numbers. The corporate is predicted to fare higher in the long run given capability enlargement plans, and add new product traces by the inorganic route and worldwide distribution partnerships.

In September 2024, it accomplished the acquisition of a majority stake in Uniclan Healthcare, which produces child diapers, wipes, and different child hygiene merchandise. The acquisition allows DOMS to diversify its portfolio by lowering publicity to a single line of merchandise.

The corporate’s consolidated income grew by 35% year-on-year to ₹501.1 crore within the December quarter. Uniclan fashioned 10% of the entire income. Excluding that, comparable consolidated income grew by 21.4% to ₹451.1 crore. The working margin (EBITDA margin) declined by 120 foundation factors to 17.5% from the year-ago interval due to larger gross sales and distribution bills, which elevated due to the consolidation of Uniclan and the influence of ESOPs granted throughout the quarter. Nevertheless, the margin remained above the corporate’s guided vary of 16-17%.

Uniclan’s margins at single digits are decrease than the general margin however DOMS expects to rise to 7-8% after which double digits in the long run.

The corporate put in a 3rd diaper manufacturing line, boosting child diaper capability to 650 million items from 400 million. Moreover, a 1 MW photo voltaic plant was commissioned on the Umargam, Gujarat facility. Within the first 9 months of FY25, the corporate invested over ₹100 crore in building, plant and equipment purchases, and photo voltaic plant set up. Moreover, Uniclan allotted ₹11.5 crore to broaden diaper manufacturing capability.

The proportion of exports in complete gross sales fell by 510 foundation factors year-on-year to 17.3% of complete gross sales within the third quarter of FY25 following geopolitical tensions within the Center East. To spice up exports, DOMS is coming into into distribution agreements with Italy’sFILA and its group corporations.The inventory of DOMS has outperformed friends together with Kokuyo Camlin, Linc and Aptitude Writing Industries over a number of timeframes. Whereas it has misplaced almost 2% in a single month, the peer group shares have misplaced 11-17%. In a current word, PL Capital said that DOMS’ valuations stay justified because the market would have corrected any vital overvaluation within the present bearish surroundings. “We imagine DOMS isn’t a plain vanilla stationery firm however a quasi-consumer discretionary proxy and can proceed to command premium valuations,” the brokerage stated. It expects earnings to develop by 27% yearly between FY25 and FY27 and values the inventory at FY27 anticipated price-earnings a number of of 60 with a goal value of ₹3,370.