CMP - Rs2,024 | TP - Rs 1,965 | SELL
We interacted with the top management of DOMS Ltd (DOMS) and visited the manufacturing facilities at Umergaon, Gujarat spread across ~34 acres of land, which is equipped with automated and backward integrated production processes.
DOMS has achieved full integration at its Umergaon plants, encompassing raw material procurement, moulding, assembly, integration of subassemblies into final products, and rigorous quality control and testing. This comprehensive approach has enhanced their competitiveness through increased productivity and cost reduction measures. It manufactures 98% of its products in-house with only fine art and chalks imported.
It recently acquired 44 acres of land which is adjacent to its existing facility with focus on writing instruments, adhesives, pencils, markers, etc will provide it required capacities to continue its growth momentum and enhance its market share.
We like the business model from long term perspective but for short term, stock definitely looks overheated. Post our report in December, stock has rallied ~155% since its IPO listing. We factor earnings to grow at a CAGR of 31% for FY24-26E, and even after assigning 43x to FY26E EPS (PEG of 1.5x), we arrived at a TP of Rs1,965. We believe stock has priced in most of the positive factors and we feel this is good time to trim your exposure. Reduce our rating to SELL from Hold.
We will re-evaluate the ratings on any sizable corrections.
Shares of DOMS Industries Limited was last trading in BSE at Rs. 1956.60 as compared to the previous close of Rs. 1976.60. The total number of shares traded during the day was 7252 in over 1345 trades.
The stock hit an intraday high of Rs. 1994.50 and intraday low of 1932.10. The net turnover during the day was Rs. 14205941.00. |
