Robust Financials with a diversified revenue base

• DOMS has undergone a remarkable financial turnaround over the last two years, rebounding from a net loss in FY21 to achieve substantial growth in both top-line and bottom-line figures. This positive trajectory has been reflected in significant improvements in the company's margins. In the first half of FY24, the company reported a net profit margin of 10% as compared to 8% in FY23.
• Notably, DOMS has established itself as a prominent player in the stationery industry, holding a noteworthy 12% market share. The brand has cultivated a strong presence not only in India but also in international markets, supported by an expansive distribution network. The quality of DOMS products has received commendable recognition, with a stellar rating of 4.5/5 stars on leading E-Commerce platforms. In a comparative analysis with its peers, DOMS stands out with the highest Return on Capital Employed (ROCE) at an impressive 33%, underscoring the company's robust profitability.
• A key highlight for DOMS is the substantial improvement in its Cash Flow from Operations, surging from Rs 15 crores in FY21 to an impressive Rs 173 crores in FY23. This enhanced cash flow provides the company with the financial capacity to pursue organic business expansion.

Valuation

• The company is asking for a PE of 46x and a market cap to sales of 4x which seems expensive as compared to its listed peers. And because we believe there is not much room for capital appreciation, our call on this IPO is neutral. ​