DOMS Industries shares up 3x from their IPO price - Key factors behind Monday's surge

Shares of DOMS Industries Limited surged by 12% on Monday, August 11, after the company reported its June quarter results, which came in slightly ahead of Street expectations.

For the quarter ended June 2025, the company posted a net profit of ₹57.3 crore, up 10.5% year-on-year (YoY) from ₹51.8 crore. Revenue stood at ₹562 crore, up 26.4% YoY from ₹445 crore.

Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) of ₹98.3 crore, up 13.8% YoY from ₹86.4 crore.

EBITDA margin of 17.5%, compared with 19.4% in the same quarter last year.

On the revenue side, performance improved compared to the previous quarter. The core stationery business grew by around 18%, slightly better than the 14% growth recorded in Q4FY25. Additional growth was driven by higher sales from the recently acquired Uniclan business.

Within the core business, the combined gross revenue from scholastic stationery, scholastic art materials, and kits and combos, which together contributed about 64% of gross sales, rose 6.4%. Strong momentum in pens, paper stationery, and hobby and craft products resulted in high-teens growth for the overall stationery segment, which JM Financial described as a key positive.

The performance of Uniclan was in line with expectations, supported by capacity additions and expansion of the channel partner network.

On the operating front, JM Financial said that the base business margin was around 18.3%, while Uniclan's margin stood at approximately 6.8%.

Looking ahead, management is conservatively projecting consolidated sales growth of 18-20%, an EBITDA margin of about 16.5-17.5%, and a net profit margin of around 10% for FY26E. This guidance factors in the amortisation impact of around ₹4.5 crore per year related to the Uniclan acquisition.

JM Financial said that it remains confident in DOMS' execution capabilities and its strategy to expand the Total Addressable Market (TAM) by entering additional categories such as toys, bags, and baby care.

The brokerage highlighted that the pace of commissioning new capacities will be critical for accelerating growth in writing instruments. Additionally, execution in paper stationery and expansion of Uniclan’s distribution network will be important medium-term monitorables.

While JM Financial has slightly adjusted its estimates to account for marginally higher discounts and lower margins, it has retained a 'Buy' rating on the stock with an unchanged price target of ₹2,845.

Meanwhile, ICICI Securities has maintained an 'Add' rating on the stock, but slashed its price target to ₹2,550 from earlier ₹2,675.

DOMS targets revenue growth of 18-20% YoY in FY26, which the brokerage firm believes is comfortably achievable, given its continued capacity expansion; differentiated and innovative product launches; and revenue contribution from Uniclan potentially increasing in H2FY26-FY27.

DOMS Industries is also expanding its pencil manufacturing capacity via greenfield expansion, which may act as a key growth trigger for FY27.

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