DOMS Industries share price jumps 12% to 11-week high after Q1 results. Should you buy?

Mint

a day ago

DOMS Industries saw its share price soar sharply in Monday's intraday trade (August 11), gaining 12.3% to reach a 11-week high of ₹ 2,569 apiece following the company's June-quarter performance, which came in above analysts estimates.
The company reported a net profit of ₹ 59.1 crore for Q1, up 8.8% YoY compared to Q1FY25 and 15.3% higher compared to preceding March quarter. Revenue from operations grew 26.4% YoY to ₹ 562.3 crore and 10.5% sequentially from Q4 FY25.
Core stationery business growth stood at 18%, with incremental gains driven by higher sales from the recently acquired Uniclan business. This was in line with expectations, aided by capacity additions and expansion of channel partners. The Uniclan business recorded sales of ₹ 36 crore, driven by increased penetration through new channel partners, according to analysts.
At the operating level, EBITDA grew 14.3% YoY to ₹ 98.7 crore and 11.9% sequentially. The EBITDA margin contracted by 185 basis points YoY to 17.6%, which was slightly better than estimates and near the upper end of management's guidance of 16.5–17.5%. On a segmental basis, core stationery business EBITDA margins stood at 18%, while Uniclan's EBITDA margins were lower at 6.8%.
In its earnings filing, the company said that the successful completion of the acquisition of Super Treads Private Limited strengthens its presence in the Eastern Indian market and adds significantly to its paper stationery manufacturing capacity.
The acquisition, it said, brings it closer to customers in Eastern India, allowing it to cater to their needs more effectively, capture a larger market share, and capitalize on the growing demand for paper stationery products.
During the quarter, the company continued to expand its product portfolio with the introduction of new products across all its product segments. Notable additions it made in its core categories of Scholastic Stationery, Scholastic Art Material, Kits & Combo Packs, Paper Stationery, and Office Supplies.
The company also reported encouraging responses for the new products introduced in the hobby & craft, baby hygiene, and back-to-school segments.
Following the company's performance in Q1, JM Financial has retained its 'buy' rating on the stock, with a target price of ₹ 2845 apiece. "We like DOMS' execution so far as well as its strategy of increasing TAM and extending to additional categories (like toys, bags, baby care, etc.). Going ahead, the pace of commissioning of new capacities will be key for acceleration in writing instruments," said the brokerage.
Execution on paper stationery & Uniclan business (distribution expansion) over the medium term will be another key monitorable, it further said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.