Target: ₹2,670
CMP: ₹2,273.45
We are initiating coverage on DOMS Industries Ltd. with a Buy recommendation and a price target of ₹2,670/share, representing an upside of 22 per cent from the CMP. Our confidence in DOMS’ promising future is grounded in the company’s robust and consistent performance over the past several quarters.
This trend is expected to persist in the coming years, supported by factors such as Continued distribution expansion in under-penetrated small towns & east/south markets and Sustained focus on NPD, capacity expansion, and entry into the larger pens category, thus broadening its product portfolio beyond the small pencil segment. Additionally, entering the fast-growing bags and toys segments will further boost growth.
DOMS is expected to achieve healthy Revenue/EBITDA/PAT growth of 25/26/28 per cent CAGR, respectively, over FY24-27E. This growth trajectory is anticipated to elevate the company’s ROCE from 22 per cent in FY24 to 25 per cent in FY27. This positive trajectory is expected to enhance the overall return profile of the company, translating into ROCE growth from 22 per cent in FY24 to 25 per cent in FY27.
Currently, at the CMP, the company is trading at 53x/41x its FY26/27E EPS. With improved visibility in earnings growth and a stronger return profile, the stock appears attractive within the midcap space.