DOMS Industries IPO Review – GMP, Pricing, Details & More

DOMS Industries IPO Review: Previously known Doms Lightfine products is a relatively new brand, founded in 2005. Now, the brand is competing with brands like Nataraj, Apsara & Camlin for a place in the hands of every student. So how did this new brand establish itself and take away market share from its competitors? (pun intended). Let’s explore!

DOMS Industries IPO Review

Today we will explore the diverse world of DOMS, the product categories it has, and the sub-brands it operates under. We’ll also learn how the brand came to be, look at the company’s financial performance, and learn more about its strengths and weaknesses.

DOMS Industries IPO Review – brief history

Although it is a brand dome It was only established in 2005 and its routes date back almost 40 years. Doms’ parent company, RR Group, was founded by Rasiklal Raveshia and Rajani Brothers. Rasiklal worked in a pencil factory in the 1970s.

The then Gujarat government had launched an entrepreneurship program providing Rs. 500 per month for those starting a new venture. This led to the company’s first pencil manufacturing plant in Umbergaon.

Rasiklal later died in a car accident, which eventually led to the second generation of promoters taking control of the business. The family currently has 15 members in leadership roles.

You may think that if a family does too much management, internal conflict may arise, but in reality, the exact opposite is true.

According to Santosh Raveshia, the current Managing Director of Doms, the company follows an ownership culture where each member is treated as the owner of a particular brand at Doms.

In 2011, under the name of an Italian company. Italian lapis lazuli and related products (FILA) We signed a strategic partnership with RR Group. As of 2015, FILA had increased its stake in DOMS to 51% by investing Rs. 740 Cr.

DOMS Industries IPO – About Us

Today Doms is the market leader in branded stationery. Domestic market share approximately 12% According to Technopark report. The company’s core products include: pencil & math toolbox They have a market share of 29% and 30%, respectively.

The company has an international presence in more than 45 countries around the world. However, the company’s market share is largely due to its huge network of 4,000 distributors across more than 1.2 million retail touchpoints.

Doms, the flagship brand, also has other brands and sub-brands including: C3, amarisand pixie fix. Brand C3 is designed for the rural market, using cheaper polymer-based pencils instead of regular wooden pencils.

Fixyfix has launched to sell exclusive glue sticks, glitter glue and perfume glue. Amariz was founded to focus exclusively on art professionals. This brand manufactures professional art brushes and kneadable erasers.

Due to the partnership between FILA Group and Doms, Doms also sells products from the parent company. India, Sri Lanka, Bangladesh, Myanmar & Maldive Islands. The partnership also allows Doms to sell international brands such as: that much, therapy, email, lyreAnd much more.

Now that we’ve learned a little about the company’s long history and how it is currently managed, let’s look at its business segments.

business division

We have a diverse product portfolio as a stationery and office supplies brand. However, the domestic stationery business, which consists of pencils, erasers and sharpeners, accounts for 45-47% of sales.

This is followed by art materials such as colored pencils and crayons, accounting for 23-26% of sales. Kits and combos, which combine individual products from the top two segments, contribute 9%-10% of revenue.

In the list below you will find a list of the company’s product segments, as well as a list of individual products sold in that specific segment.

DOMS Industries IPO Review – Industry Information

The stationery and art materials industry covers a wide range of products, from paper products to writing instruments. As of 2022, the global market value is approximately $192 billion. The market size is expected to reach $220 billion by 2027, at a CAGR of approximately 2.8%.

Asia Pacific holds the dominant share in the stationery and art material products market, followed by North America. In 2020, Asia and North America combined accounted for approximately 60% to 62% of the stationery products market.

In CY22, the printing and writing paper segment dominated the global stationery and art materials market with a market share of approximately 33%, followed closely by the Scholastic Stationery segment with a market share of approximately 32%.

The market is at a very advanced stage where growth is very slow. Alongside this, digitalization and environmental issues around wood use remain one of the industry’s biggest concerns.

Nonetheless, India’s ever-increasing literacy, which makes the country’s education system accessible to more and more people, may drive demand for the company in the coming years.

DOMS Industries IPO Review – Financial Highlights

In FY23, Doms Industries reported revenue of R. 1217 Cr, an increase of 85.38% from Rs. 656 Cr in FY22. The company has continued to expand its revenue at a CAGR of 72.51% since FY21.

Net profit increased from 100 billion won to 100 billion won. 17 Cr in FY22 to Rs. 103 Cr in FY23, a five-fold increase in a year. This is a result of increased operating margins due to marginal reductions in staff costs relative to sales.

With current earnings, the company returns a significant amount to shareholders. As of FY23, return on equity was 33.54% and return on employed capital was 33.31%. Debt was maintained at 0.28 times equity.

Key players in the market

Below is a list of DOMS’ competitors in the organized market. We can see that DOMS is significantly less dependent on its best-selling product segments. However, it is a brand that relies more on domestic demand than on exports.

Company Strengths

1. Partnership with FILA: FILA’s partnership with Doms will enable the brand to enter the Asia Pacific and Middle East markets. At the same time, Doms can sell FILA products in the Indian subcontinent.
2. Leadership in key products: The company has a wide range of products in the stationery and art segments, enabling it to become the Indian market leader in the pencils and tool boxes segment.
3. Strong brand value: The company is continuously developing a wide range of high-quality products. This allows customers to become trendsetters in their industry.
4. Robust infrastructure with backward integration: The company operates 13 facilities across Gujarat. These facilities provide end-to-end operations from design conceptualization to distribution. This increases efficiency and reduces operating costs.
5. Leverage technology infrastructure: Doms uses Salesforce Automation to efficiently track the performance of large sales teams. At the same time, companies use distribution management systems to efficiently track and replenish inventory.

company’s weaknesses

1. Volatile raw material price: The key components of a company that makes pencils are: Polypropylene. This material is used as the lead in pencils, and price changes can have a significant impact on margins.
2. Product concentration: Although the company has a variety of product lines, the company’s top two products accounted for approximately 60% of its revenue in FY23. A downward trend in these products could have a detrimental effect on the Company’s total sales.
3. Fierce Competition: Despite gaining significant market share, the company still faces the risk of losing market share to cheaper alternatives from competitors.
4. Dependence on promoter: Despite having a huge share of the domestic market, the company’s international presence largely depends on its corporate promoter, FILA. 59% of the company’s total exports were achieved through cooperation with FILA.
5. Digitization: It’s probably the biggest threat to the industry as a whole. The world continues to digitize, reducing exposure to paper and other consumables.

DOMS Industries IPO Review – GMP

Shares of Doms Industries Ltd were trading at a 57% premium in the gray market on December 7, 2023. The stock was lagging at Rs 1238. This gives a premium of Rs 448 per share on a ceiling price of Rs 790.

Key IPO Information

promoter: Sanjay Mansukhlal Rajani & Ketan Mansukhlal Rajani As an individual promoter Fabbrica Italiana Lapised Afini SpA As a corporate promoter

Book Operations Lead Manager: JM Financial Ltd, BNP Paribas, ICICI Securities Ltd, IIFL Securities Lts.

Proposal registered by: Link Intime India Pvt Ltd.

purpose of the problem

1. Rs 850 Cr or 70% of the net proceeds will be used to provide a profitable exit to the promoters of the company.
2. Rs 350 Cr or 30% of the funds will be raised through fresh issuance in the IPO. The funds will be used to finance the establishment of another manufacturing facility.

conclusion

Doms Industries entered an already established market in 2005, with high production volumes and low margins, and has built a significant reputation in recent years. However, this business can nearly double its revenue every year with profit maximization.

At the same time, the company maintains strong returns of over 30%. This is a commendable feat to achieve. Now, is this enough to convince you to invest in a depressed industry at a high valuation of 43x? Let us know in the comments below.

Written by Nasir Hussein

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