Whalesbook
DOMS Industries Revenue Aligns with Expectations; BUY Rating Stands
DOMS Industries reported revenues of Rs 6,040 million, meeting Prabhudas Lilladher's projections. The company's EBITDA margin was 16.7%, also in line with forecasts. Strong performance in the stationary segment significantly boosted these results.
Stationary Division Fuels Growth
The stationary division saw a notable 19.0% year-over-year revenue increase. This expansion was driven by the launch of new products across various categories, including pencils, pens, erasers, and bags, with the division achieving an EBITDA margin of 18.5%.
Expansion Plans and Future Growth
Prabhudas Lilladher forecasts sales and profit after tax (PAT) to grow at a compound annual growth rate (CAGR) of 20% and 23% respectively between FY26 and FY28. This projection is supported by planned capacity expansion at Umbergaon, scheduled to begin in the second quarter of FY27. The company has also expanded its product range, adding approximately 400 new Stock Keeping Units (SKUs) in the last year.
Margin Outlook and Valuation
EBITDA margins are expected to dip by 50 basis points to 16.8% in FY27 due to raw material price volatility. However, margins are projected to recover to 17.7% in FY28, benefiting from price adjustments and stabilizing raw material costs. DOMS Industries currently trades at 53 times and 39 times its estimated earnings for FY27 and FY28. Prabhudas Lilladher maintains its BUY recommendation and unchanged target price of Rs 2,883, based on a 50x FY28E EPS multiple.