Prabhudas Lilladher has kept a 'Buy' rating on DOMS Industries with a target price of Rs 2,703. While the company achieved 19% revenue growth in the first quarter of fiscal year 2027, rising raw material costs led to a decline in profit margins. Investors are now focused on how the company manages these cost pressures while scaling up capacity.
Brokerage firm Prabhudas Lilladher has reiterated its 'Buy' recommendation for DOMS Industries, setting a target price of Rs 2,703. The update follows the company’s financial performance for the first quarter of the 2027 fiscal year, where the business saw healthy sales growth but faced challenges on the profitability front.
In the latest quarter, DOMS Industries reported revenue of Rs 670.5 crore, marking a 19.2% increase compared to the same period last year. This growth highlights strong domestic demand for the company’s stationery products. However, rising raw material costs weighed heavily on performance, causing the company’s net profit to fall by 23.4% to Rs 45.3 crore. The operating profit margin dropped to 12.3%, down from 17.6% in the previous year, as the company struggled with volatile input prices.
Despite the pressure on margins, the brokerage remains optimistic about long-term growth. The company is actively working on expanding its manufacturing capabilities, with new production units at Umbergaon expected to start operations in the second quarter of the 2027 fiscal year. This expansion, combined with the integration of the Reynolds brand into its product portfolio, is seen as a key driver for future revenue. The firm expects margins to recover by fiscal year 2028 as raw material prices stabilize and the company adjusts its pricing strategy.
Investors should note that DOMS Industries trades at a high valuation, with the stock recently moving in the Rs 2,240–2,253 range. This premium valuation means that the market is sensitive to any changes in earnings or delays in margin recovery. The primary risks remain the ongoing volatility in raw material costs, which could continue to affect profitability in the short term, and the successful execution of new capacity expansion projects.
Moving forward, the key things to watch will be the company’s ability to pass on increased costs to customers and the timeline for the Umbergaon facility to reach full production capacity. Additionally, how the management integrates the Reynolds brand to improve product mix will be an important factor for profitability in the coming quarters.