ICICI Securities has maintained a 'Buy' rating on DOMS Industries with a target price of ₹2,600. While the brokerage remains positive about the company's 19.2% revenue growth, it acknowledges temporary pressure on profit margins. Investors are tracking how the company manages raw material costs and new manufacturing capacity in the coming quarters.
ICICI Securities has maintained its 'Buy' recommendation on DOMS Industries, establishing a target price of ₹2,600 per share. This report follows the company’s recent announcement of its financial results for the first quarter of the 2027 fiscal year. The brokerage's view reflects a balance between the company's strong topline performance and the current challenges affecting its profitability.
Balancing Revenue Growth and Margin Pressure
DOMS Industries reported a robust 19.2% year-on-year growth in revenue, reaching ₹670.5 crore for the quarter. This performance was driven by healthy seasonal demand during the back-to-school period and an expanded distribution network. However, the company also reported a 23.4% decline in Profit After Tax (PAT) to ₹45.3 crore for the same period.
The decline in profitability stems largely from margin contraction, with EBITDA margins slipping to 12.3% from 17.6% in the same quarter of the previous year. According to the brokerage, these pressures are primarily due to external factors, including higher raw material costs caused by global supply chain disruptions. Internal costs also played a role, as the company faced increased expenses related to employee hiring, channel partner support, and higher depreciation from recent investments.
Strategic Expansion and Reynolds Integration
Despite the margin headwinds, management has reaffirmed its revenue growth guidance of 18%–20% for FY27, signaling confidence in domestic market demand. The brokerage views the current margin issues as transient and expects improvements as the company leverages its new manufacturing facilities.
A key monitorable for investors is the status of the company’s major greenfield project. The first phase of this 50-acre facility is on track to be commissioned by the end of the second quarter of FY27, which is expected to boost production efficiency. Additionally, the smooth integration of the Reynolds brand continues to be a strategic focus, as the company aims to strengthen its presence in the premium office supplies segment.
The final benefit of these initiatives will depend on several variables, including the stability of raw material prices, the successful scaling of the new manufacturing units, and the ability to maintain pricing power in a competitive stationery market. Investors may continue to track the pace of margin recovery and management commentary on demand trends in the upcoming quarters.