DOMS Industries spikes 6%; Antique initiates coverage, sees 23% upside

Antique believes DOMS Industries is well poised to grow at a faster clip in the overall consumption space through capacity addition, distribution expansion, and strong innovation pipeline

DOMS Industries’ shares jumped 6.4 per cent in trade, logging an intra-day high at ₹2,666.95 per share. At 9:48 AM, DOMS Industries' share price was trading 5.93 per cent higher at ₹2,653.4 per share. In comparison, BSE Sensex was down 0.27 per cent at 84,904.36. 

 

Antique Stock Broking has initiated coverage on DOMS Industries stock with a ‘Buy’ rating and a target price of ₹3,250 per share, implying 22.8 per cent upside from the current levels.

 

The brokerage believes DOMS Industries is well poised to grow at a faster clip in the overall consumption space through capacity addition, distribution expansion, and strong innovation pipeline.

 

 

“DOMS has delivered a robust 24 per cent compound annual growth rate (CAGR) in sales over FY20–25. Motilal Oswal expects this healthy trajectory to continue, modeling revenue growth of around 20–21 per cent over FY25–28, underpinned by new capacity at Umbergaon, scale-up of newer categories, entry into adjacencies, and sustained product innovation,” the brokerage noted.  READ LATEST STOCK MARKET UPDATES LIVE

Why is Antique Stock Broking bullish on DOMS Industries?

Poised for long-term growth

DOMS has undertaken various initiatives in the past few years, such as capacity expansion in

existing Umbergaon facility, capturing 4 to 5 per cent market share in the ₹13,000 crore pen category (9 times the pencil category) in a short time frame and entry into adjacencies such as bags, toys, baby hygiene, kits and combos that offer strong cross-selling potential and synergy benefits. Moreover, the upcoming new 44-acre capacity and the recent acquisition of Super Treads (paper) provide long-term growth visibility, according to the brokerage. 

Capacity bottlenecks to ease with new greenfield facility

In the last two years, DOMS has been operating at high utilisation levels of 80–90 per cent across key categories and export lines (including supplies to FILA), leading to capacity constraints.

 

To address this, the company is setting up a 44-acre greenfield facility in Umbergaon. Phase 1, Unit 1 (about 6 lakh sq. ft.) is expected to commence operations from Q4FY26. In the initial stage, daily production capacity is expected to rise from: 

• Pencils: from 5.5 crore units to 8 crore units per day.
• Pens: from 3.25 crore units to 6 crore units per day.

Over time, DOMS plans to allocate dedicated production space in the new facility for FILA products, supporting export growth and improving supply reliability.  ALSO READ | Why did Blue Cloud Softech Solutions share price rise 5% in trade today?

Huge headroom for distribution-led growth

DOMS currently services around 1.45 lakh retail outlets across India, leaving substantial scope to expand its reach to over 3 lakh outlets. Expansion would be higher in underpenetrated eastern and southern regions, along with smaller towns, according to analysts. 

 

Incrementally, easing off capacity constraints and the recent acquisition of Uniclan and Super Treads will help ramp up distribution expansion. The recent goods and services tax (GST) cut on stationery products to 0 per cent also provides a level playing field and favour organised branded players to expand rapidly, Antique noted.

Margins and return ratios expected to stay healthy

Antique expects DOMS’ Earnings before interest, tax, depreciation and amortisation (Ebitda) margin to remain within the guided band of 16.5–17.5 per cent over FY26–28, albeit slightly below FY24–25 levels due to:

• Consolidation of Uniclan, a lower-margin but scalable baby-hygiene business
• ESOP-related costs (impact of around 30–40 basis points)
• Front-loaded/start-up costs related to the new Umbergaon facility

However, as fast-growing categories scale up, capacity utilisation improves, and raw material prices remain stable, the brokerage expects margins to hold within the guided range. Return on capital employed (RoCE) is projected to remain strong at 23 per cent-plus over FY25–28E, supported by higher asset turns.

 

Disclaimer: View and outlook shared belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.