Antique Stockbroking has initiated coverage on DOMS Industries Ltd, initiating a 'buy' call on account of the company's strong growth visibility and entry into high-growth areas.
The brokerage firm has set a target price of Rs 3,250, which points to a significant upside from the current market price of Rs 2,500.
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Antique believes the stationery brand, which manufactures pencils, sharpeners, geometry boxes and other essential educational tools, is 'poised for the next leg of growth'.
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This comes after a period of consolidation in DOMS' stock price, with the scrip falling 15% on a year-over-year basis. With over 90% return since listing in late 2023, the stock currently trades with a relative strength index of 59, which suggests neutral market sentiment.
DOMS' growth will be led by the company's rapid capacity addition, distribution expansion, and strong innovation pipeline.
The company has already showcased strong growth by registering 24% sales performance CAGR between FY20 to FY25. Antique expects this growth to continue during the FY25 to FY28 period.
In fact, DOMS' growth will be boosted further by the phased commissioning of a new 44-acre facility in Umbergaon to address capacity constraints as well as plans to scale up fast-growing categories (pens, papers, kits & combo).
The company is looking to expand its presence in categories such as bags and toys, while the acquisition of Uniclan and Super Threads may aid expansion into smaller towns and eastern and southern regions.
Another key growth lever for DOMS Industries could be the profitable portfolio expansion through innovations, with the company notably adding 500 SKUs since FY24.
Out of 11 analysts tracking the company, nine have a 'buy' rating, and one recommends a 'hold,' while one suggests 'sell,' according to Bloomberg data. The average 12-month consensus price target implies an upside of 16%
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