Doms - Capex Plans On Track; Augurs Well For Strong Growth In FY25-26: ICICI Securities

ICICI Securities Report

We remain positive on Doms Industries Ltd. due to its well-established competitive advantages of:

1. strong brand,

2. differentiated products and

3. presence across diverse business streams.

Maintain Buy.

Key risks:

Steep increase in competitive pressures; raw material prices; and failure of key new product launches.

We hosted institutional investors for Doms plant visit and senior management interaction at Umbergaon (Gujarat). Takeaways:

1. Doms has reported strong revenue growth in all its segments that undertook capacity expansion in the past. With proposed 44- acre capacity addition, scholastic art material may drive strong growth for the company in FY25–26.

2. Distribution network has high potential for expansion, which may drive revenue growth. Also, Doms has steadily expanded revenue/store indicating market share gains.

3. It has developed a strong competitive advantage over peers due to its strategic tie-up with FILA.

4. The company has registered strong growth since inception, largely attributable to its partnership-based approach. Partnerships with FILA, Microwood and Pioneer have done well over past decade and we model similar benefits from stake acquisition in Clapjoy and Skido.

5. Doms has the least product concentration risk (best-selling stock keeping unit contributes <5% to total sales).

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