This stationary stock has zoomed over 150% against issue price in 5 months

Shares of DOMS Industries hit a new high of Rs 1,985, trading 151% higher against its issue price of Rs 790 per share

Shares of DOMS Industries hit a new high of Rs 1,985 as they rallied 7 per cent on the BSE in Tuesday's intraday trade. In the past three trading days, the stock of the stationary company has surged 11 per cent after it reported a good March quarter (Q4FY24) performance with earnings before interest, tax, depreciation, and amortisation (Ebitda) growing 22.6 per cent year-on-year (YoY) to Rs 75.93 crore.

Ebitda margin expanded 40 bps to 18.8 per cent as compared to 18.4 per cent in Q4FY23.

The stock is trading at its highest level since its market debut on December 20, 2023. With the past three days' rally, DOMS is trading 151 per cent higher over its issue price of Rs 790 per share.

Meanwhile, in Q4FY24, DOMS Industries' profit after tax jumped 29.6 per cent Y-o-Y at Rs 46.93 crore on the back of 20 per cent Y-o-Y rise in operational revenue at Rs 403.74 crore.

Revenue performance was led by continued strength in the domestic market while export market performance was muted. This, along with benign input costs (inflation in polypropylene prices offset by benign wax/oil prices) and better product mix, resulted in gross and Ebitda margins sustaining at healthy levels on sequential basis, according to analysts.

DOMS is one of India's largest Stationery and Art products company. The company designs, develops, manufactures, and sells a wide range of well designed, quality Stationery and Art products, categorised into seven categories that include, Scholastic Stationery, Scholastic Art Material, Paper Stationery, Kits and Combos, Office Supplies, Hobby and Craft and Fine Art Products.

The management said the commencement of construction to create one of the largest single unit stationeries and art material manufacturing facilities at their 44-acre land in Umbergaon shall pave way for significant capacity additions for the coming years thereby improving DOMS' ability to meet the growing demand for its products.

Going ahead, share gains in core categories backed by innovative products and faster scale-up in Pens/Art Material aided by capacity additions will drive overall revenue growth (guiding for c.23-25 per cent sales growth in FY25E). On a conservative basis, assuming some inflation in input costs, management expects Ebita margins to be around 17 per cent, analysts at JM Financial Institutional Securities said.

The brokerage firm estimates 23.6 per cent/25.5 per cent sales/PAT CAGR over FY24-26E. Given the superior growth trajectory & healthy RoIC, analysts expect the stock to trade at a premium multiple. They remain optimistic on the company’s ability to gain market share by focusing on innovations and leveraging end-to-end manufacturing capabilities.

"Any sharp correction in the stock should be looked at as an opportunity to add," the brokerage firm said with a ‘buy’ rating on the stock and a target price of Rs 2,000 per share.