Doms, which is a leading creative products company in India, is listing its shares on the stock exchange in an equity IPO that’s open to retail investors from 13th to 15th of December 2023.
In this article, we’re going to give you all the details you need if you’re thinking of subscribing to the listing.
About the company
Doms is a leading player in the Indian stationery and art products market. They manufacture and sell a wide range of these products, primarily under the brand ‘DOMS’. These products are not only available in India but also in over 40 other countries as of March 2023. Pencils, which is a core product along with mathematical instrument boxes, enjoy very high market shares at 29% and 30% by value respectively.
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Financial summary
Here is a brief financial summary of the company for the last 3 financial years.
| Particulars | March 31, 2021 | March 31, 2022 | March 31, 2023 |
| Net worth | 2,336.1 | 2,472.4 | 3,374.3 |
| Revenue | 4,028.1 | 6,836 | 12,118.9 |
| Profit / Loss | (60.2) | 171.4 | 1,028.7 |
| EPS | (1.07) | 3.05 | 18.82 |
| Total borrowings | 972.7 | 849 | 1,001 |
₹ in million, except share data or when otherwise stated.
| Metric | 2021 | 2022 | 2023 |
| Gross Margin | 39.09% | 36.59% | 37.01% |
| EBITDA Margin | 7.45% | 10.2% | 15.4% |
| PAT Margin | (1.50)% | 2..51% | 8.49% |
| ROE | N/A | 6.86% | 33.54% |
| ROCE | 0.36% | 10.04% | 33.31% |
The IPO offer
The company is planning to raise ₹1,200 crore in the market, which is almost equivalent to US$145 million at today’s value. Amongst the offering, the fresh issue constitutes ₹350 crore, which is 29% of the entire amount. A ‘fresh issue’ is when a company issues new shares to the retail market, which leads to an increase in the shares outstanding and increase in the equity value of the company.
For DOMS, the rest of the ₹850 crore (71%) of the IPO is an Offer for Sale, which means that these shares come from earlier investors in DOMS who are cashing out at the IPO.
Retail investors can expect to pay anywhere from ₹750 to ₹790 per share for the IPO listing.
The company says that the fresh issue part of the fund raising exercise will be used to finance the cost of establishing a new manufacturing facility to increase production capabilities.
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Overview of the stationery product market
The global scholastic stationery product market was valued at $61 billion in 2022, so it is obviously a very large market. Furthermore, it is expected to grow at a CAGR of 2.2% over a seven year period from 2023 to 2030 to reach an approximate valuation of $68 billion by the end of the decade.
The growth of this market can be attributed to factors like an ever-increasing population, the education rate in the country, and the larger government policies towards education. While increased digitalisation has reduced the need for students to largely depend on stationery for their education, most elementary students still start with physical tools and move on to digital alternatives.
Peer comparison
Here is a brief comparison of DOMS’ peers in the stationery business in India, and how they compare under key financial metrics.
| Company | P/E Ratio | EPS | Operational revenues (₹ million) |
| DOMS | 43.19 | 18.29 | 12,118.9 |
| Kokuyo Camlin | 63.75 | 2.44 | 7,749.43 |
| Line | 25.90 | 25.15 | 4,867.55 |
| Pidilite Industries | 101.67 | 25.05 | 117,991.00 |
Risks and strengths
Risks
- The company derived a significant (60%) of gross product sales in each of the last 3 financial years from the sale of key products, and 30% of gross sales attributable to wooden pencils only.
- Some raw materials used for production are natural resources and therefore subject to risk of depletion and regulation in the future.
- The company recorded a loss of more than ₹6 crore in fiscal year 2021.
- Negative cash flows could hamper liquidity in the company and financing for operations and working capital.
Strengths
- The company developed a pan-India distribution network. As of March 2023, DOMS products are sold in over 3,500 cities in India.
- They operate 10 manufacturing facilities across Umbergaon, and have a capacity of more than 4700 million units as of March 2023.
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Major shareholders
The major shareholders of the company are:
- FILA
- Santosh Rasiklal Raveshia
- Sanjay Mansukhlal Rajani
- Ketan Rajani
- Chandni Vijay
- Sejal Santosh
- Sheetal Hiren
While promoters have held 100% of the company pre-offer, they will hold only 75% of the company post-offer.
Conclusion
Tentatively, DOMS IPO basis of allotment of shares will be finalised on Monday, December 18th and the company will initiate refunds on Tuesday, December 19, while the shares will be credited to the demat account of allottees on the same day following refund. DOMS IPO shares are likely to be listed on BSE and NSE on Wednesday, December 20th.
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