Target: ₹3,200
CMP: ₹2,500.60
Doms Industries delivered another strong quarter, led by capacity additions in pen, paper products and hobby & craft. We expect its core scholastic stationery business to get a boost from increased capacity in Q1-FY27, which should help accelerate sales growth. The GST rate for pencils, books, etc has moved from 12 per cent to 0 per cent, improving its product affordability and its competitive positioning vs the unorganised segment.
Doms lost 3-4 per cent of sales due to GST disruption in Q2-FY26, which we believe will be largely recovered in H2.
Doms has doubled its sales over FY16-19 and by more than 3x over FY19-25. Its strength has been innovation and end-to-end manufacturing, due to which it is able to offer greater value to its consumers while having attractive margins and ROE.
Doms does not offer credit to its stockists, which indicates strong demand for its products.
Risks (Upside): Faster-than-expected scaling of the pens business; successful entry into large new categories such as toys and bags in which the company has already made small acquisitions; and benefits of scale resulting in stronger-than-expected margin expansion. (Downside): Moderation in revenue growth in categories such as pencils and erasers a opportunities to gain further market share, reduce higher competition in pens and under-utilisation of incremental pens capacity; and muted revenue growth amid large investments for capacity expansion.
Published on November 13, 2025
