DOMS Industries shares surge 6%; Buy stock for 30% upside, says Antique

Shares of DOMS Industries Ltd climbed 6 per cent in Wednesday's trade as Antique Stock Broking initiated coverage on the stock with a target of Rs 3,250, suggesting a 30 per cent potential upside. The stock rose 5.7 per cent to hit a high of Rs 2,647.80 on BSE, as the brokerage believes the company is well-positioned for the next leg of growth in the consumption space, driven by capacity expansion, a widening distribution network, and a strong pipeline of product innovations. 

DOMS Industries has delivered a robust 24 per cent CAGR in sales over FY20–25, and Antique Stock Broking expects this momentum to continue, projecting revenue growth of 20 per cent CAGR over FY25–28. This growth is expected to be supported by the phased commissioning of a new 44-acre greenfield facility in Umbergaon, which will address existing capacity constraints, the scaling up of fast-growing categories such as pens, papers, kits and combos, and expansion into adjacent categories like bags and toys, as well as underpenetrated geographies in eastern and southern India. 

Recent acquisitions, including Uniclan in baby hygiene and Super Treads in paper, are also expected to strengthen the company’s market reach, while continued focus on product innovation has led to the addition of 500 new SKUs since FY24. Antique Stock Broking initiated coverage on DOMS with a BUY rating, valuing the stock at Rs 3,250 per share based on a DCF approach.

Over the past two years, DOMS has faced significant capacity constraints, with utilisation reaching 80–90 per cent across categories and for exports to FILA. 

The new Umbergaon facility is expected to ease these constraints in a phased manner, with the first unit of Phase 1, covering 600,000 sq. ft., scheduled to commence operations in 4QFY26. 

Its production capacity is expected to increase from the current 5.5 million pencils and 3.25 million pens per day to 8 million pencils and 6 million pens per day in the initial stage. The company also plans to dedicate space for FILA products at the new facility, further enhancing its production capabilities.

DOMS’ distribution reach currently extends to 145,000 outlets, but there is significant headroom to expand to over 300,000, particularly in smaller towns and underpenetrated eastern and southern regions, Antique said.

The combination of increased capacity and recent acquisitions is expected to accelerate this expansion. Additionally, the recent reduction in GST on stationery products from 12 per cent to 0 per cent provides a more favourable environment for organized branded players, supporting the company’s growth plans.

Margins and return ratios are expected to remain healthy over the medium term. EBITDA margins are projected to stay within the guided 16.5–17.5 per cent range over FY26–28, slightly lower than FY24–25 due to the acquisition of the lower-margin Uniclan business, ESOP costs, and front-loaded start-up costs related to the new facility. However, with the scale-up of fast-growing categories, higher capacity utilisation, and stable raw material prices, margins are expected to remain within the guided range. 

Return on capital employed is projected to stay above 23 per cent during FY25–28, supported by improved asset turns.

Overall, Antique Stock Broking expects DOMS to deliver robust revenue, EBITDA, and PAT growth of 21 per cent, 20 per cent, and 21 per cent CAGR, respectively, over FY25–28. Return on equity and RoCE are projected at 22 per cent and 26 per cent by FY28. The brokerage maintained a BUY rating on DOMS with a target price of Rs 3,250 per share, highlighting the company’s strong growth trajectory driven by capacity expansion, distribution reach, and product innovation.