Doms K R Chokey

DOMS INDUSTRIES LIMITED
IPO NOTE 11th December 2023

India Equity Institutional Research II IPO Note II 11th December 2023
Doms Industries Ltd.

Issue Opens On Issue Closes On Price Band (INR) Issue Size (INR Mn) Rating
December 13, 2023 December 15, 2023 750-790 11,392 – 12,000 SUBSCRIBE
DOMS designs, develops, manufactures, and sells a wide range of stationery and art products, primarily under their flagship brand
‘DOMS’, in the domestic market as well as in over 45 countries internationally. They are the second largest player in India’s branded
‘stationery and art’ products market, with a market share of ~12.0% by value, as of FY23. Their domestic distribution network for
general trade comprises over 120 super-stockists, and over 4,000 distributors along with a dedicated sales team of over 500 personnel
covering more than 120,000 retail touch points over 3,500 cities and towns. They undertake their manufacturing operations from
facilities located in Umbergaon, Gujarat and Bari Brahma, in Jammu and Kashmir. Their Umbergaon Manufacturing Facilities are spread
over approximately 34 acres of land covering approximately 1.18 Mn square feet, which are equipped with modern and automated
production processes.
OFFER STRUCTURE
Particulars IPO Details
Indicative Timetable
No. of shares under IPO
15.2 Offer Closing Date Friday, December 15, 2023
(Mn)
Fresh issue (# shares) Monday, December 18,
4.4 Finalization of Basis of Allotment with Stock Exchange
(Mn) 2023
Offer for sale (# shares) Tuesday, December 19,
10.8 Initiation of Refunds
(Mn) 2023
Fresh issue (INR Mn) 3,500 Tuesday, December 19,
Credit of Equity Shares to Demat accounts
2023
Offer for sale (INR Mn) 8,500 Wednesday, December 20,
Commencement of Trading of Eq.shares on NSE
2023
Price band (INR) 750 – 790 Source: IPO Prospectus
Post issue MCAP (INR Objects of the Offer: The net proceeds will be utilized for the following purpose
45,510 – 47,938
Mn) Part finance the cost of establishing a new manufacturing facility to expand its
production capabilities for a wide range of writing instruments, water colour pens,
Source: IPO Prospectus markers and highlighters.
Issue # Shares INR Mn % General corporate purposes
QIB 1,13,92,405 9,000 75%
Shareholding Pattern Pre-Issue (%) Post-Issue (%)
NIB 22,78,481 1,800 15%
Promoters & Promoters Group 100.0% 75.0%
Retail 15,18,987 1,200 10%
Others 0.0% 25.0%
Net Offer 1,51,89,873 12,000 100% Total 100.0% 100.0%
Source: IPO Prospectus Source: IPO Prospectus
Particulars (In INR Mn) FY21 FY22 FY23 H1FY24

Revenue 4,028 6,836 12,119 7,618
Adj EBITDA 300 697 1,867 1,274
Adj EBITDA Margin 7.5% 10.2% 15.4% 16.7%
PAT (90) 144 958 706
PAT Margin - 2.1% 7.9% 9.3%
Net Worth 2,417 2,581 3,553 4,222
RONW* NA 6.9% 33.5% 38.0%

Source: IPO Prospectus, Restated Statement, consolidated numbers
*RONW is annualized for H1FY24
RESEARCH ANALYST KRChoksey Research Phone: +91-22-6696 5555, Fax: +91-22-6691 9576
Unnati Jadhav, research5@krchoksey.com, +91-22-6696 5420 is also available on Bloomberg KRCS<GO>
www.krchoksey.com
Thomson Reuters, Factset and Capital IQ

Company Overview
DOMS was founded in 1976 as a partnership firm, R.R. Industries, by Rasiklal Amritlal Raveshia and Mansukhlal Jamnadas Rajani.
Subsequently, in 2005, another partnership firm ‘S. Tech Industries’ was founded by certain members of their promoter group, to
primarily undertake the business of manufacturing and sale of polymer based ‘scholastic stationery’. In 2006, in order to streamline
their operations and achieve integration of businesses, their company (then known as ‘Writefine Products Private Limited’) acquired
the business of these partnership firms. In 2017, the name of their Company was changed to ‘DOMS Industries Private Limited’. In
2012, the Company entered into a strategic partnership with FILA (Fabbrica Italiana Lapis ed Affini), a listed Italian multinational
company, engaged in the supply of various ‘art materials’ and ‘stationery products’, with a global presence.
DOMS designs, develops, manufactures, and sells a wide range of stationery and art products, primarily under their flagship brand
‘DOMS’, in the domestic market as well as in over 45 countries internationally, as of September 30, 2023. They are the second largest
player in India’s branded ‘stationery and art’ products market, with a market share of ~12.0% by value, as of FY23, according to
Technopark report. They offer well-designed and quality ‘stationery and art material’ products to consumers, which they classify
across seven categories: (i) scholastic stationery; (ii) scholastic art material; (iii) paper stationery; (iv) kits and combos; (v) office
supplies; (vi) hobby and craft; and (vii) fine art products.
Scholastic stationery includes pencils, erasers, sharpeners, mathematical instruments, etc. Scholastic art material includes wax
crayons, color pencils, watercolors, etc. Paper stationery includes notebooks, exercise books, and drawing books. Office supplies
include pens, board makers, and glue sticks. Kits and combos include stationery kits, art material kits, and painting kits.
They have a widespread multi-channel distribution network with a strong pan-India presence. In the domestic market, they sell their
products through (i) general trade; (ii) modern trade and ecommerce; and (iii) Original Equipment Manufacturer (OEM) & institutions.
Their domestic distribution network for general trade comprises of over 120 super-stockists, and over 4,000 distributors along with a
dedicated sales team of over 500 personnel covering more than 120,000 retail touch points over 3,500 cities and towns.
They undertake their manufacturing operations from facilities located in Umbergaon, Gujarat and Bari Brahma, in Jammu and
Kashmir. Their Umbergaon manufacturing facilities are spread over approximately 34 acres of land covering approximately 1.18 Mn
square feet, which are equipped with modern and automated production processes. Further, their Jammu manufacturing facility is
spread across approximately 2 acres of land covering approximately 0.07 Mn square feet, focussed on producing wooden slats from
locally sourced wood.
‘DOMS’ is their flagship brand. The products under the ‘DOMS’ brand are known for their premium quality and product designing.
They sell all products in the scholastic stationery, scholastic art material, paper stationery, hobby and craft, office supplies and kits and
combos under this brand. In H1FY24, domestic revenue contributed 81.0% of total revenue at INR 6,162 Mn which increased from
75.0% in FY21. The exports revenue contributed 19.0% of the total revenue at INR 1,441 Mn which decreased from 25.0% in FY21.
Product Category FY21 FY22 FY23 H1FY24

Revenue contribution (in Total % of gross product % of gross % of gross % of gross
Total sales Total sales Total sales
INR Mn) sales sale product sale product sale product sale
Scholastic stationery 1,910 46.2 3,270 47.2 5,688 46.2 3,544 45.6
Scholastic art material 975 23.6 1,664 24.0 2,928 23.8 2,030 26.1
Paper stationery 403 9.8 641 9.3 1,274 10.3 773 10.0
Kits and combos 465 11.3 797 11.5 1,264 10.3 673 8.7
Office supplies 246 6.0 403 5.8 752 6.1 488 6.3
Hobby and craft 4 0.1 6 0.1 157 1.3 113 1.5
Fine art products 58 1.4 96 1.4 142 1.2 83 1.1
Others 70 1.7 54 0.8 113 0.9 65 0.8
Grand Total 4,130 100.0 6,931 100.0 12,317 100.0 7,768 100.0
Key products FY21 FY22 FY23 H1FY24

Revenue contribution (in Total % of gross product % of gross % of gross % of gross
Total sales Total sales Total sales
INR Mn) sales sale product sale product sale product sale
Wooden pencils 1,528 37.0 2,311 33.4 3,900 31.6 2,524 32.4
Crayons 226 5.5 352 5.1 724 5.8 553 7.1
Mathematical instruments 134 3.3 345 5.0 688 5.5 521 6.7
Sketch pens 186 4.5 368 5.3 688 5.5 470 6.0
Erasers 196 4.7 425 6.1 669 5.4 363 4.6
Exercise books 217 5.3 293 4.2 664 5.3 394 5.0
Total 2,488 60.2 4,093 59.1 7,333 59.5 4,826 62.1
Source: IPO Prospectus.
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Industry Overview
The stationery and art materials industry deals in a wide range of products & categories, comprising paper products, writing
instruments, computer stationery, school stationery, office stationery, stationery adhesives, and art & craft products among others.
The global market was valued at approximately USD 192 Bn in CY22 and is expected to reach a market size of USD 220 Bn by CY27E,
registering a CAGR of approximately 2.8% during the forecasted period, as compared to 2.0% from CY16 to CY22.
The U.S. accounted for approximately one-third of the global stationery and art materials market size in CY22 and China captured
approximately 28.0% of the global market size for the stationery products. Germany has reported approximately 10.0% of the global
stationery and art materials market share, Japan contributed approximately 7.0% to the global market followed by India and Canada
which constituted approximately 2.4% and approximately 2.0% of the global stationery and art materials market respectively.
The global school’s (scholastic) stationery product market was valued at USD 61 Bn in CY22. The market is expected to grow at a CAGR
of 2.2% during the period CY22 to CY27E and is expected to reach approximately USD 68 Bn by CY27E.
The growth of this market can be attributed to factors such as the increasing population, education rate, government policies towards
education, and evolving digitalization trends that have aided in the growth of the conventional stationery and art materials industry as
students are now spending more time in self-studying, drawing, coloring, and doing other hands-on activities.
The global office stationery product market was valued at USD 34 Bn in CY22 and expected to reach USD 38 Bn by CY27E, thus growing
at a CAGR of 2.2% during the forecasted period compared to a CAGR of 1.3% during CY16 to CY22.
Global market size for the stationery Market size for the global school
product market (USD Bn) stationery product market (USD Bn)
220 68
192 61
181 56 58
170
145 46
CY16 CY20 CY21 CY22 CY27E CY16 CY20 CY21 CY22 CY27E
Source: IPO Prospectus
The global printing and writing paper market size was valued at USD 63 Bn in CY22 and projected to reach at USD 68 Bn by CY27E,
expecting a CAGR of 1.5% between CY22 and CY27E. China and the U.S. are the world’s two major paper producing countries.
The Indian paper market accounts for approximately 5.0% to 6.0% of the world’s paper production and the per capita consumption of
paper in India is around 15 kg, as compared to that of the global average of 57 kg.
The stationery adhesives are a variety of glues made just for use at home, office or school. It consists of a wide range of products such as
glue sticks, rollers, tapes, and others. The global stationery adhesives market size was valued at USD 4.2 Bn in CY22 and is projected to
reach USD 5 Bn by CY27E, thus growing at a CAGR of 3.5% during the forecasted years.
The art and craft stationery products market is divided into paintings and drawing, paper crafts, kid’s crafts, crayons, scholastic art
material and other art & craft supplies. The global market size was estimated at USD 13 Bn in CY22, projected to reach the value of
approximately USD 15 Bn by CY27, thus exhibiting a CAGR of 3.0% over the period.
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Industry Overview
The writing instrument market in India comprises of pens, pencils and markers, and highlighters. As of FY23, the Indian domestic writing
instrument market is INR 133.5 Bn by value and is expected to grow at a CAGR of ~16.0% till FY28E to reach a market value of INR 277.5
Bn.
In FY23, pens formed the major share within the writing instrument market, constituting ~80.0% (INR 107 Bn) by value and are primarily
driven by volume. Pencils constituted ~12.0% (INR 165 Bn) and markers and highlighters constituted ~8.0% (INR 100 Bn) of the Indian
writing instruments market by value. In terms of volume, market size of pens, pencils and markers, and highlighters are ~100 Bn, ~4 Bn
and ~0.5 Bn respectively as of FY23.
Based on product type, pens can be sub-categorised into ballpoint pen, gel pen and rollerball pen. As of FY 23, ballpoint pens capture
~68% of the pen market in India by value, followed by gel pens and rollerball pens capturing ~20% and ~12% of the market by value. Based
on price points, pens can be classified into mass market, premium and super premium pens.
Generally, pens priced up to INR 15 are referred to as mass market pens, those priced between INR 15 to INR 400 are referred to as
premium pens and those priced above INR 400 are referred to as super-premium pens. The mass market pens constitute ~80% of the
pen market in India by value.
Mass market segment is primarily driven by volume and price point becomes critical in this (difficult to increase price). Students and
corporate supplies are the primary customer segment of mass market pens. Premium segment is driven by both price and volume,
where in the premiumisation is built on product design and branding.
These are primarily used by professionals and in corporate giftings. Super premium segment is primarily driven by price. There are also
many international players like Muji, Parker and Montblanc offering pens in premium and super premium segment.mass-market
Indian Domestic Writing Instrument Market – By Value (INR Bn) in FY23

22
33
10
7 8 17 223
11 12
78 107
71
FY17 FY22 FY23 FY28E
Pens Pencils Markers & Highlights
Source: IPO Prospectus
Nearly 36.0% (~INR 138.5 Bn) of the stationery and art materials market in India is controlled by branded peers in FY23. Within the
domestic market, ten players namely ITC, Hindustan Pencils, DOMS, Camlin, Flair, Luxor, Linc, BIC Cello, Navneet, and Rorito garner ~
75.0% market share.
Basis revenue from operations in FY23, ITC is the market leader having ~ 20.0% market share by value, followed by companies like DOMS
(~ 12.0% market share), Hindustan Pencils (~ 9.0% market share), Flair (~ 8.0% market share) and Camlin (~ 7.0% market share).
Indian stationery and art materials market exported products valued ~INR 57 Bn in FY23 to major export markets like USA. Many
branded players are generating a significant share of their revenue through exports. Key players like DOMS have exported stationery
products valued INR 2.6 Bn in FY23.
Key players in the industry generate a substantial share of their revenues from a single category. For example, players like Hindustan
Pencils and Luxor generate ~60% and ~75% respectively of revenue from its largest category. On the other hand, DOMS generated only
~34% of revenue from its largest category in FY23, lowest among its peers, showcasing a de-risked business profile and headroom to grab
market share across categories.
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KEY STRENGTHS
Diversified product portfolio fuelling the growth of DOMS
DOMS has leveraged its experience and success with its flagship brand ‘DOMS’ and introduced new brands and sub-brands to the
market that complement its flagship brand. For example, to capture the affordable market segment, they launched the brand ‘C3’ in
the year 2012, under which they sell polymer black lead pencils, polymer colour pencils, erasers, sharpeners, chalks, etc. For FY23 and
H1FY24, ‘DOMS’ contributed 80.4% and 83.2%, respectively, of their Gross Product Sales amounting to INR 9,900 Mn and INR 6,461
Mn respectively, and ‘C3’ contributed 3.9% and 2.9% of their Gross Product Sales amounting to INR 487 Mn and INR 230 Mn, during
the respective periods. Further, they launched ‘Amariz’ in the year 2022, which is exclusively focused on fine art products, and ‘Fixy
Fix’ in the year 2023, which is exclusively focused on a range of glues and adhesives. While their product offerings having evolved
significantly over the past several years, their largest product ‘pencils’ contributed only 31.6% and 35.9% to their Gross Product Sales
amounting to INR 3,899 Mn and INR 2,790 Mn in FY23 and in H1FY24 respectively. They have the least concentration to overall
revenue from the largest product segment among peers as of FY23. In FY21, FY22, and FY23, and H1FY24 they sold an aggregate of
1.48 Bn units, 3.06 Bn units, 3.93 Bn units, and 2.2 Bn units of products across their product categories, respectively and achieved
Gross Product Sales of INR 4,130 Mn, INR 6,930 Mn, INR 12,317 Mn, and INR 7,768.39 Mn respectively.. Their presence across multiple
stationery categories and price points has enabled them to be the fastest-growing stationery and art material products company in
India in terms of revenue over the period from FY20 to FY23.
Strategic partnership with F.I.L.A enabling access to global markets and product know-how
FILA, is DOMS Corporate Promoter, who is an Italy-based leading global enterprise devoted to the research, design, manufacture
and sale of tools for creative expression, catering to millions of homes, schools, offices and ateliers. As of December 31, 2022, FILA
had a consolidated total revenue of USD ~ 0.84 Bn. In the year 2012, FILA entered into a strategic partnership with DOMS, acquiring
18.5% of the paid-up capital of the Company, with a subsequent increase to 51.0% in the year 2015. DOMS collaboration with FILA has
helped them expand their international footprint in Asia Pacific, Europe, and Middle Eastern markets with the distribution of their
products. They have exclusive rights for the marketing, sales, and distribution of some of the products under the name and
trademark of certain entities of FILA Group in India, Nepal, Bhutan, Sri Lanka, Bangladesh, Myanmar, and Maldives. Further, they
manufacture certain specific products at their Umbergaon Manufacturing Facilities, for the FILA Group and also undertake OEM
manufacturing for the FILA Group. Further, they have helped FILA by improving their ability to source high quality products at
competitive prices from India for global sales and also consolidate certain procurement activities. For instance, FILA earlier bought
water colour cakes from different countries. However, in recent years, FILA purchases water colour cakes from DOMS. The
Company’s export sales to FILA Group amounted to INR 693 Mn, INR 1,065 Mn, INR 1,586.07 Mn, and INR 854.82 Mn in FY21, FY22
and FY23, and for the H1FY24, respectively.
Achieving operational excellence through backward integration

DOMS is focused on achieving a greater degree of backward integration of their manufacturing processes, which they believe
enables them to improve their efficiency, ensure quality control, reduce dependency on third parties and enhance profitability. They
have also taken steps to ensure the risk of availability of raw material which are diversified with multiple suppliers and imports. In
particular, the Company has backward integrated their manufacturing process by producing several key components and materials
used in manufacturing of finished goods. For instance, there is complete backward integration in the manufacturing process for
pencils. The key components used in the manufacturing of pencils are wooden slats and sleepers, black and colour lead, lacquer,
erasers, and ferrule, in case of an eraser tipped pencil. In the past, they procured some of these components from third party
vendors. However, over a span of time, they started manufacturing wooden slats at their Jammu manufacturing facility from
wooden logs sourced locally from Kashmir. These wooden slats are then transported to their manufacturing facilities at Umbergaon,
Gujarat, where they are well treated and seasoned, and the softened wood used ensures smooth sharpening and longer shelf life.
They manufacture the black and colour leads used in the production of pencils. The black lead is manufactured primarily using
graphite and the colour lead is manufactured using clay, wax, and pigments. The lacquer used on the pencils is manufactured using
pigments, fillers, and solvents. Further, the eraser tipped pencil, the small erasers and the aluminium ferrule which are fitted on the
top of the pencils are manufactured at their facilities in Umbergaon, Gujarat and are also sourced from external parties. This has
helped them to achieve economies of scale resulting in their ability to competitively price their products.
Experienced Promoters and management team

DOMS Individual promoters and directors, Santosh Rasiklal Raveshia, Sanjay Mansukhlal Rajani, Chandni Vijay Somaiya and Ketan
Mansukhlal Rajani, have over 23 years, 38 years, 19 years and 20 years of experience, respectively in the ‘stationery and art materials’
products industry and have been instrumental in the growth of ‘DOMS’ as a brand. While Santosh Rasiklal Raveshia, Sanjay
Mansukhlal Rajani, and Chandni Vijay Somaiya oversee operations at their manufacturing facilities in Umbergaon, Gujarat, Ketan
Mansukhlal Rajani is responsible for their operations at their manufacturing facility in Jammu. The Individual Promoters are actively
involved in the day-to-day operations of their Company, ensuring tight cost control and improvements in margins. Their corporate
promoter, FILA has its own representatives on the Board, who bring their experience of the stationery industry and international
exposure.
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Future Growth Strategies

Expansion of manufacturing capacities
The stationery and art materials industry is fragmented and distribution-led, and entry barriers include economies of scale, high
capital requirements, extensive distribution network and retail footprints. DOMS currently manufacture their products from their
plants across Umbergaon, Gujarat with an installed capacity of 4,734 Mn units as on March 31, 2023, for their key products, with an
efficiency of 4,223 Mn units during such period. In order to meet the expected rise in consumer demand across their product
categories, they have undertaken further capital expenditure in FY23 of INR 1,259 Mn, primarily towards enhancing their
manufacturing capabilities across their range of product categories. They also intend to streamline their operations and enhance
their manufacturing capacity for writing instrument products by adding approximately 0.10 Mn square feet to their Umbergaon
manufacturing facilities. They continue to focus on further integrating their operations and benefit from economies of scale and
improve operating margins. Further, to enhance their manufacturing operations in order to meet the current and anticipated
demand of their products, they have acquired a parcel of land measuring approximately 44 acres located adjacent to Umbergaon
Manufacturing Facilities. They intend to use a portion of the net Proceeds amounting to INR 256 million, INR 2,061 Mn and INR 1,482
Mn in FY24E, FY25E and FY26E, respectively, for the construction of the manufacturing facilities on this land. By planning for a high
utilization rate and with the commissioning of additional capacities they strive to continue reducing their cost of production and
achieving economies of scale.
Strengthen the distribution network and expand modern trade channels
The Company have a widespread multi-channel distribution network with a strong pan-India presence. They seek to continue to
develop their distribution network and increase their geographical reach through reinforcing and expanding their distribution
channels. They seek to achieve this by increasing the network of their distribution channel partners as well as increasing their
presence across different retail store formats in addition to the traditional stationery stores. They continue to remain focussed on
entering into arrangements with more super stockists in order to create new distribution channels to reach under-served areas and
smaller towns. While they believe that their pan-India presence affords them a significant reach to all parts of the country, they
believe that the markets in eastern and southern India, have a scope of further market expansion and they intend to capitalise on
the same by shoring up their network presence in these markets. In terms of their international presence, over the years they have
developed a robust export sales network through their association with FILA as well as through distributors in over 45 countries,
covering the Americas, Africa, Asia Pacific, Europe, and Middle East, that sell products under the DOMS and C3 brands. They intend
to expand their distribution capabilities in certain South East Asian countries as well as in the African continent. They have recently
entered the European market with sales of their DOMS branded products in Italy and they believe with their product offering and
quality, they will be able to generate significant sales from European countries as well.
Undertake inorganic growth through acquisitions or strategic partnerships
They have a demonstrated history of acquiring and successfully integrating companies, with significant acquisitions in the last year.
Through these acquisitions, they seek to consolidate their position further in the Indian ‘stationery and art material’ products
segment, increasing their scale and market share. In FY24, they undertook the acquisition of Micro Wood Private Limited as a
strategic investment, which will help them in achieving greater degree of backward integration for manufacturing of certain
products. Further, they recently also acquired a minority stake in ClapJoy Innovations Private Limited, which is in the business of
manufacturing and sale of ‘toys’, to enter into a complementary line of business to capitalise on their existing distribution and sales
network. They intend to continue to actively pursue strategic investments and acquisitions, which are complementary to their
business. Such efforts will be focused on: (i) increasing their market share further; (ii) deepening their presence in certain
geographies; and (iii) improving profitability. They continue to seek and explore opportunities that complement and grow their
product offerings as well as ancillary products in the categories are associated through the growing years of kids, children and
young adults. They may also look to increase their portfolio of brands through acquisitions to provide their customers with
differentiated offerings. They intend to continue to evaluate these opportunities from time to time.
Strengthening the ‘DOMS’ brands and enhance synergies
As of FY23, branded play controls nearly 36.0% (~INR 138 Bn) of the stationery market in India. Branded play is estimated to capture
~43.0% (~INR 305 Bn) market share by FY28E, according to Technopak Report. The ‘stationery and art material’ market in India has
untapped potential in multiple categories with a limited presence of branded players. The market is gradually shifting towards
branded play, because of shift in consumer preference towards premium and innovative products, GST implementation, branded
players undertaking various brand building initiatives and economies of pan-India distribution network by branded players. One of
their key strengths is the strong brand equity generated by the DOMS brand. Their leadership position in the ‘stationery and arts’
products industry, recognised primarily under the DOMS brand, provides them with an opportunity to grow their business. They
have consistently allocated significant resources to establish and strengthen their brand and to increase their brand recall as one of
India’s leading ‘stationery and arts’ brands. They have consciously developed their product categories under their flagship brand
‘DOMS’, allowing consumers to associate with their brand and believe that DOMS as a brand commands a recall amongst the
consumers due to its image and goodwill established over the years.
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INVESTMENT RATIONALE
Leadership position in the Indian ‘stationery and art material’ industry driving rapid business growth:
DOMS has a strong brand as evidenced by their leadership position in the ‘stationery and art material’ products industry in India.
They are the second largest player in India’s branded ‘stationery and art’ products market, with a market share of ~12.0%, by value, as
of FY23, according to Technopak Report. Their core products such as ‘pencils’ and ‘mathematical instrument boxes’ enjoy high
market shares; 29.0% and 30.0% market share by value in FY23 respectively, according to Technopak Report. They have the widest
breadth of product categories amongst their peers in India and are amongst the few ‘stationery and art material’ products
manufacturing and marketing companies globally with such product breadth. Since they operate in a fragmented and distribution-
led market such as ‘stationery and art material’ industry, it is critical to be able to provide a holistic product portfolio to their
customers and drive their brand equity. They have a wide product portfolio across the demand spectrum and are not dependent on
a single demand factor. They believe their comprehensive product offering positions them as the one stop shop for all ‘stationery
and art material’ requirements for their customers. In addition to being present across multiple product categories to cater to a
diverse demography, they have also ensured their products are available at various price points, through their brands ‘DOMS’ and
‘C3’, each of which benefit from strong brand loyalty and unique market positioning. For example, they offer ‘pencils’ ranging from
MRP INR 3.00 per pencil to INR 12.50 per pencil, and ‘mathematical instruments box’ MRP ranging from INR 90.00 per box to INR
200.00 per box.
Strong brand recall driven by high quality, innovative and differentiated products:
The company’s strong and reputed brand increases consumer confidence and influences purchase decision in their favour. They sell
a diverse portfolio of products which occupy leadership positions in multiple of their respective product market categories in India.
This indicates a high brand recall value for their products and helps leverage their pricing strategy. As per the Technopak Report,
among ‘core’ peers as defined in the report, they were the only company to have achieved a higher revenue in FY22 (post Covid) vs.
FY20 (pre Covid), indicative of the strength and resilience of the brand. Their R&D efforts are focused on product development, cost
reduction, and integration of modern technologies to their processes, which help them in improving their operational efficiency.
Further, new processes which are developed in their R&D units are initially implemented on a pilot basis at their Umbergaon
Manufacturing Facilities to understand the efficacy and challenges before initiating commercial production. Over the years, they
have introduced innovative and utility focused products such as, inclusion of a ‘pencil extender’ as an ancillary product to their
colour pencil set, which enables the consumer to continue to use the pencils even after its size is reduced due to repeated
sharpening. They also strive to innovate ancillary facets of their product such as the packing while being price sensitive. For instance,
their innovative packaging of their hexagon shaped eraser, made their end product more appealing without any significant increase
to the price of the product..
Robust manufacturing infrastructure, with a focus on backward integration to drive efficiencies:

They operate 13 manufacturing facilities across Umbergaon, Gujarat, spread over approximately 34 acres of land covering
approximately 1.18 Mn square feet and is one of the largest stationery manufacturing facilities in India. Their annual installed capacity
as on March 31, 2023, for their key products was 4,734.93 Mn units. They undertake end-to-end operations, from conceptualization
to design, manufacturing, packaging and distribution of their product portfolio through their integrated operations at their
Umbergaon Manufacturing Facilities. Their fully integrated operations comprise procurement of raw materials, moulding,
assembling, integration of subassemblies into finished products, quality control and testing of finished products. Their Umbergaon
Manufacturing Facilities are built for large scale operations and their facilities and storage depots are also strategically located to
achieve shorter time to market, greater cost competitiveness (through close proximity to raw material suppliers) and
responsiveness of their inventory positions to changes in portfolio market as a result of proximity, thereby allowing them to cater to
domestic and international markets more effectively. They also operate one manufacturing facility which is spread across
approximately 2 acres of land covering approximately 0.07 Mn square feet at Bari Brahma, in Jammu and Kashmir, where they
produce wooden slats from locally sourced wood. The wooden slats produced by them are further used as an input material for
production of wood-cased pencils.
Robust multi-channel distribution network with strong pan India presence:

They have a widespread multi-channel distribution network, through which they sell their products (i) through general trade, where
they sell products to their super-stockists, who sell to a distributor, and who in turn sells it to a wholesaler or retailer; (ii) through
modern trade, where they sell their products to supermarkets, hypermarkets, mini markets, cash and carry stores and on leading e-
commerce platforms; and (iii) to large corporates, institutions, and other companies who sell their products either in their own
brand or under their flagship ‘DOMS’ brand. The Company believes that its systematic distribution network ensures effective market
penetration and facilitates their growth strategy. Over the years, they have developed a pan-India distribution network. As of
September 30, 2023, their products were sold in over 3,500 cities and towns in India. They believe their deep distribution network
and wide-scale accessibility has enabled them to become a household brand across the country with a highly diversified sales mix. In
FY23, the North contributed 30.7% of revenue, the West contributed 33.3% of revenue, the East contributed 17.0% of revenue, and the
South contributed 19.0% of revenue.
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Key Risks
Distribution risk
They are dependent on their ‘general trade’ distribution network for a significant portion (more than 70.0%) of their Gross Product
Sales in each of the last three Fiscals and the H1FY24. Failure to manage their ‘general trade’ distribution network efficiently could
have an adverse impact on their business, results of operations and financial condition. They receive payments directly from the
super-stockists irrespective of onward sales to channel partners. They had 73, 105, 122 and 126 super-stockists as on March 31, 2021,
March 31, 2022, March 31, 2023 and September 30, 2023, respectively. They have entered into formal agreements with approximately
75.0% of their total super-stockists (accounting for more than 90.0% of their ‘general trade’ Gross Product Sales), pursuant to which
the super stockists agree to not distribute or promote products or enter into any agreement with companies in similar line of
business as them.
Dependence on FILA
As a Promoter, they are dependent on the FILA Group for their business operations and in particular for their export sales (export
sales to FILA Group amounted to INR 693 Mn, INR 1,065 Mn, INR 1,586 Mn and INR 854 Mn in FY21, FY22, FY23, and H1FY24,
respectively, accounting to more than 59.0% of their total export sales in each of the last three Fiscals and six months period ended
September 30, 2023 and more than 10.0% of their Gross Product Sales in each of the last three Fiscals and six months ended
September 30, 2023. In the event FILA ceases to be a Promoter, it may affect their business operations, adversely impact their R&D
and export capabilities. Further, any damage to the reputation of the FILA Group may adversely affect their business, results of
operations and financial condition. Any deterioration in their relationship with the FILA Group or for any other strategic reason
which may result in them exiting from their Company, may have a material impact on their business operations, R&D and export
capabilities. Additionally, any damage to the brands or goodwill of the FILA Group, if not immediately and sufficiently remedied
could, by extension and by virtue of their association with FILA, materially affect their reputation, business, results of operations and
financial condition.
Supply risk
They have not entered into any formal contracts or exclusive arrangement with their suppliers from whom they procure materials
consumed by them for their manufacturing process. Further, they are dependent on certain limited suppliers for some of their raw
materials. In the event, they are unable to procure such materials at terms favourable to them, or at all, their business, financial
condition and results of operations may be adversely affected. The lack of an exclusive formal arrangement with their suppliers
exposes them to risks including delivery failure or component shortages owing to a lack of contractually agreed terms and
conditions. While they have not faced any material issues with their suppliers in the past three years, in the event they are unable to
maintain a consistent, high quality and cost-effective supply chain in the future, their business, prospects, financial condition, and
operating results could be adversely affected. Further, for some of their raw materials such as tinplate, polypropylene and
polystyrene, they are dependent on certain limited suppliers. With regards to one of their key input materials that is ‘wood’, they
procure it directly from suppliers in Kashmir, Belgium, Kerala and China on a purchase order basis. If any of the suppliers were to
cease operations or decide to discontinue their supply relationship, they would need to find alternatives, within a requisite time
period. The top 5 suppliers contributed 23.1% of the total raw materials consumed in H1FY24 which increased from 19.6% in FY21.
Intense competition
They face significant competitive pressures in their business. Their inability to compete effectively would have a material adverse
effect on their business, prospects, operations or financial results. While they work consistently to offset pricing pressures,
manufacture new products, advance their technological capability, improve their products or enhance their production efficiency to
reduce costs, their competitors may succeed in developing and offering products that are more effective, popular, cost-effective
than any they may develop which may render their products obsolete or uncompetitive and materially and adversely affect their
business and financial results. They are also subject to competition on various factors including, but not limited to, targeted
audience, quality, wide range and availability, incentives to channel partners through periodic product specific and target-based
schemes and are also subject to pricing pressures in the stationery and art materials market, both from the organized as well as from
the unorganized sectors. Their competitors in the organized sector include, BIC Cello, Flair Writing Industries, Hindustan Pencils,
Kokuyo Camlin, Linc, Luxor Writing Instruments, Navneet Education, and Rorito International. Additionally, significant competition
may also require them to increase their expenditure on sales and marketing.
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Outlook and Valuation
DOMS Industries had a robust 2-year revenue CAGR between FY21 and FY23 of 73.5%, much higher than most of their listed industry
peers. EBITDA margin in H1FY24 was 16.7% higher than the mean of listed industry peers. PAT margin in H1FY24 was 9.7% higher than
the mean of listed industry peers. The Company had superior return ratios; ROE and ROCE of 38.0% and 36.1% respectively
annualized for H1FY24 which is the highest among the listed industry peers. The Company is the second largest player in India’s
branded ‘stationery and art’ products market, with a market share of ~12.0% by value, as of FY23. The core products such as ‘pencils’
and ‘mathematical instrument boxes’ enjoy high market shares; 29.0% and 30.0% market share by value in FY23 respectively. The
Company manufactures products from its plants across Umbergaon, Gujarat with an installed capacity of 4,734 Mn units as on
March 31, 2023, for key products, with an efficiency of 4,223 Mn units during the period. DOMS intends to use a portion of the net
proceeds amounting to INR 256 Mn, INR 2,061 Mn, and INR 1,482 Mn in FY24E, FY25E and FY26E, respectively, for the construction
of the manufacturing facilities on the newly purchased land. By planning for a high utilization rate and with the commissioning of
additional capacities, DOMS strives to continue reducing its cost of production and achieve economies of scale. The Company’s
pan-India presence affords them significant reach to all parts of the country, although there is further scope for expansion in
eastern and southern markets where DOMS intends to shore up its network. The Company recently entered the European market
by introducing its DOMS-branded products in Italy; the high quality of its products could help generate significant sales from
European countries for DOMS, going forward. At the upper end of the price band, the Company’s P/E is 43.2x which is higher than
the industry average of 36.0x. We believe the premium is justified given the Company’s robust market share, established
distribution network, expansion of capacities and venturing into new markets, and strong revenue growth and profitability. We
recommend a ‘SUBSCRIBE’ rating on the IPO of DOMS Industries Ltd.
Peer Comparison
Comparison with listed peers (H1FY24)
Parameters (in INR Kokuyo Navneet
DOMS Industries Linc
Mn) Camlin Education
Revenue 7,618 4,306 2,431 10,572
Gross margin 39.8% 38.5% 39.2% 47.6%
EBITDA margin 16.7% 9.6% 10.6% 19.4%
PAT margin 9.7% 6.5% 6.2% 17.1%
ROE* 38.0% 20.3% 16.7% 29.8%
ROCE* 36.1% 24.8% 22.9% 27.1%
CMP ( as on 7th dec
NA 168 703 144
closing)
Market Cap NA 16,840 10,440 32,600
Source: IPO Prospectus, KRChoksey Research
*ROE and ROCE annualized for H1FY24
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Financials:
Profit & Loss Statement
INR Millions FY21 FY22 FY23 H1FY24
Revenues 4,028 6,836 12,119 7,618
COGS 2,453 4,321 7,634 4,589
Gross profit 1,575 2,515 4,485 3,029
Employee cost 711 1,014 1,418 1,025
Other expenses 564 804 1,201 729
Adj EBITDA 300 697 1,867 1,274
Adj EBITDA Margin 7.5% 10.2% 15.4% 16.7%
Depreciation & amortization 348 380 407 228
EBIT (47) 317 1,460 1,047
Interest expense 88 103 119 78
Other income 60 26 46 24
PBT (76) 240 1,388 992
Tax (16) 69 359 252
Share of Profit/(Loss) of Associates/Minority - 0 0 (1)
Minority interest 30 28 71 33
PAT (90) 144 958 706
EPS (INR) (1.1) 3.1 18.3 13.1
Source: IPO Prospectus, KRChoksey Research.
Cash Flow Statement

Net Cash Generated From Operations 152 509 1733 1,081
Net Cash Flow from/(used in) Investing Activities (187) (337) (1,359) (1,283)
Net Cash Flow from Financing Activities 249 (306) (124) 342
Net Inc/Dec in cash equivalents 214 (134) 250 140
Opening Balance 13 227 93 343
Closing Balance Cash and Cash Equivalents 227 93 343 482
Source: IPO Prospectus, KRChoksey Research
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Financials:
Balance Sheet
Property, Plant and Equipment 1,869 1,861 2,799 3,466
Capital Work-in-Progress 31 40 69 23
Right of use Assets 379 382 382 475
Goodwill 33 20 20 624
Other Intangible Assets 5 2 1 1
Investment - 15 14
Other Financial Assets 114 106 109 157
Deferred Tax Assets (Net) 3 12 32 51
Other Tax Assets (Net) 10 11 3 11
Other Non-Current Assets 58 93 174 204
Total Non-Current Assets 2,502 2,528 3,604 5,027
Inventories 1,208 1,592 1,846 1,986
Trade Receivables 419 492 356 497
Cash and Cash Equivalents 227 93 343 482
Bank Balances other than cash and cash equivalents as above 63 65 74 16
Loans 5 6 8 8
Other Current Assets 152 199 166 278
Total Current Assets 2,074 2,446 2,794 3,268
TOTAL ASSETS 4,575 4,975 6,398 8,295
Equity Share Capital 4 4 4 563
Other Equity 2,332 2,469 3,371 3,414
Equity attributable to owners of the Company 2,336 2,472 3,374 3,976
Non-controlling interest 81 108 179 246
Total Equity 2,417 2,581 3,553 4,222
Borrowings 29 29 152 856
Lease Liabilities 283 294 303 365
Provisions 60 78 91 120
Total Non-Current Liabilities 372 400 545 1,340
Borrowings 944 821 849 908
Lease Liabilities 81 87 95 116
Total Outstanding Dues of Micro Enterprises and Small Enterprises; and 34 45 51 56
Total Outstanding Dues of Creditors other than Micro Enterprises and Small
534 766 819 889
Enterprises
Other Financial Liabilities 131 131 175 302
Other Current Liabilities 48 77 200 231
Provisions 11 19 36 77
Current Tax Liabilities (Net) 4 48 74 154
Total Current Liabilities 1,787 1,993 2,299 2,733
Total Liabilities 2,158 2,394 2,844 4,073
TOTAL EQUITY & AND LIABILITIES 4,575 4,975 6,398 8,295
Source: IPO Prospectus, KRChoksey Research.
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ANALYST CERTIFICATION:
I, Unnati Jadhav (MMS, Finance ), Research Analyst, author and the name subscribed to this report, hereby certify that all of the views expressed in this research report
accurately reflect my views about the subject issuer(s) or securities. I also certify that no part of our compensation was, is, or will be directly or indirectly related to the
specific recommendation(s) or view(s) in this report.
Terms & Conditions and other disclosures:
KRChoksey Shares and Securities Pvt. Ltd (hereinafter referred to as KRCSSPL) is a registered member of National Stock Exchange of India Limited and Bombay Stock
Exchange Limited. KRCSSPL is a registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000001295. It is also registered as a Depository Participant with CDSL, CDSL Registration No IN-DP-425-2019.
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and Exchange Board of India ("SEBI") and is licensed to carry on the business of Research Analysts including preparing and distribution of Research Reports. This research
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that rating on a particular security has been suspended temporarily and such suspension follows applicable regulations and/or KRCSSPL policies, in circumstances where
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DOMS INDUSTRIES LIMITED

IPO NOTE 11th December 2023

Doms Industries Ltd.

Net Offer 1,51,89,873 12,000 100% Total 100.0% 100.0%

Source: IPO Prospectus Source: IPO Prospectus

Particulars (In INR Mn) FY21 FY22 FY23 H1FY24

Adj EBITDA 300 697 1,867 1,274

Adj EBITDA Margin 7.5% 10.2% 15.4% 16.7%

PAT (90) 144 958 706

PAT Margin - 2.1% 7.9% 9.3%

Net Worth 2,417 2,581 3,553 4,222

RONW* NA 6.9% 33.5% 38.0%

Doms Industries Ltd.

Product Category FY21 FY22 FY23 H1FY24

Key products FY21 FY22 FY23 H1FY24

Doms Industries Ltd.

Source: IPO Prospectus

Doms Industries Ltd.

Indian Domestic Writing Instrument Market – By Value (INR Bn) in FY23

FY17 FY22 FY23 FY28E

Pens Pencils Markers & Highlights

Source: IPO Prospectus

Doms Industries Ltd.

Achieving operational excellence through backward integration

Experienced Promoters and management team

Doms Industries Ltd.

Future Growth Strategies

Doms Industries Ltd.

Robust manufacturing infrastructure, with a focus on backward integration to drive efficiencies:

Robust multi-channel distribution network with strong pan India presence:

Doms Industries Ltd.

Doms Industries Ltd.

Doms Industries Ltd.

Source: IPO Prospectus, KRChoksey Research.

Cash Flow Statement

INR Millions FY21 FY22 FY23 H1FY24

Doms Industries Ltd.

Doms Industries Ltd.

Terms & Conditions and other disclosures:

In case of any grievances, please write to grievance@krchoksey.com

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