Doms Industries (Buy)

Target: ₹3,370

CMP: ₹2,796.55

DOMS reported strong performance in Q3-FY25 with revenue/PAT beat of 4/8 per cent respectively led by good show in the hygiene business. Revenues from Uniclan Healthcare (hygiene business subsidiary) stood at ₹50.10 crore with an EBITDA margin of around 10 per cent. As the third line has commenced production, installed capacity has increased to 650 million pieces per annum. Given the capacity expansion, we expect hygiene business to provide an additional growth fillip in FY26.

 Excluding the hygiene business, revenue was up 21.4 per cent y-o-y with an EBITDA margin of 18.4 per cent indicating core stationary business is on a strong footing. Even core stationary business is on a steady growth path with ongoing expansion in pens and pencils. Progress over the new development plan on 44-acres land parcel at Umbergaon is on track and the first building is expected to be ready by Q3-FY26E. Led by the ongoing expansion of product basket and distribution network, we expect sales and PAT CAGR of 27 per cent over FY25-FY27.

We have marginally increased our EPS estimates by around 1-4 per cent over FY25E-FY27E amid strong performance in Q3-FY25 and retain Buy on the stock with a TP of ₹3,370 (60x FY27E EPS; no change in target multiple).