Analysts Warn Potential New Buyers that the DOMS Industries IPO is Unlikely to Achieve Significant Listing Gains

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Because of its stellar three-year financial record, analysts and the investor community anticipate a robust listing for DOMS Industries on December 20.

The stock’s grey market premium (GMP) is at Rs 495, which is a staggering 62 percent higher than the issue price of Rs 790. Demand for a security is shown by the GMP, which is the premium at which the stock trades in an unofficial unlisted market.

The IPO for DOMS Industries saw a significant oversubscription, and we anticipate that the issue will be positively listed. We anticipate that the stock will list at a premium to the issue of about 65%,” stated Dhruv Mudaraddi, a research analyst at Stoxbox.

“We think DOMS Industries’ outstanding performance over the last three years, which included notable increases in revenue and profitability, is responsible for the good listing. The company’s financial situation has been further strengthened by its amazing transition from losses in FY21 to sizable profits in FY22, according to Mudaraddi.

The manufacturer of art supplies and stationery, which derives 70% of its revenue from the scholastic stationery and art material categories, raised Rs 1,200 crore through the public offering. The offer consists of an offer-for-sale (OFS) of 1.07 crore shares, with the proceeds going to the selling shareholders, and a fresh issue of 44.3 lakh shares valued at Rs 350 crore.

“DOMS Industries is poised for a spectacular debut on the stock market,” stated Swastika Investmart’s Head of Wealth, Shivani Nyati. “This zeal is in line with the incredible 99x subscription, which demonstrates the strong fundamentals of DOMS and the enormous investor confidence.”

Nyati also complimented the business on its history of strong financial results, including steady increases in sales and profits. According to her, this is further supported by ambitious plans for expansion that open up intriguing new possibilities.

Mostly under the flagship brand “DOMS,” DOMS Industries designs, develops, produces, and markets a broad variety of stationery and creative products in more than 45 countries. With a 12 percent market share, it is the second biggest player in India’s branded “stationery and art” products industry, trailing only ITC, which commands a 20 percent market share. The market is dominated by the company’s main goods, “mathematical instrument boxes” and “pencils,” with respective market shares of 29 and 30 percent.

The company’s asset utilisation was deemed impressive by analysts, as seen by its ROA of 16.1%, above the industry average. Analysts pointed out that DOMS Industries Ltd has some significant benefits in the market despite the fully priced P/E, such as market leadership, a strong brand presence, established worldwide relationships, and a foothold in the export market.

But after it’s on the market, you should proceed with some caution because the valuation will probably increase in cost.

“A significant portion of the company’s future expansion is already anticipated by the substantial GMP, leaving little room for present profit. Consequently, we advise against making any new purchases after listing,” Nyati stated. Investors hoping for rapid gains might think about booking gains and pulling out.

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