Pencil maker Doms to kick off December IPO season, fixes price band at ₹750-790

• The stationery maker Doms will open its ₹1,200 crore initial public offer (IPO) on December 13 and close on December 15.
• The company intends to use net proceeds from the fresh issue to set-up a new manufacturing facility and general corporate purposes.
• The grey market is bullish on the public offer, as it expects 52% listing gains from the stock.
  

After a bumper IPO fundraising in November, the December season of public offers will be kicked off by pencil maker Doms. The Gujarat based stationery and office supplies maker Doms will open its ₹1,200 crore initial public offer (IPO) on December 13 and close on December 15. It has fixed a price band of ₹750-790 per share.

The grey market is bullish on the public offer, as it expects 52% listing gains from the stock. The issue is a combination of fresh equity to the tune of ₹350 crore and offer for sale component is at around ₹850 crore.

The company intends to use net proceeds from the fresh issue to set-up a new manufacturing facility in addition to general corporate purposes.

As much as 10% of the issue will be offered for retail investors, and the bid lot is 18 shares and in multiples thereof.

About the company

The Gujarat-based company was set-up in 1973 as a partnership firm, RR Industries by founders — late Rasiklal Amritlal Raveshia and late Mansukhlal Jamnadas Rajani. After a long series of changes it built its brand ‘Doms’ under which it now sells scholastic stationery, art material, paper stationery, office supplies and more.

It had around 12% market share in branded stationery and art materials market in FY23. Its core products such as pencils and ‘mathematical instrument boxes’ enjoy 29% and 30% market share by value in FY23, as per Technopak Report.

Its products are manufactured in Umbergaon at Gujarat and Bari Brahma in Jammu and Kashmir. As on March 31, 2023, it had seven warehouses, two depots, over 100 super stockists, and over 3,750 distributors across the country.

Its listed peers in the market are Kokuyo Camlin, Linc and Pidilite Industries.

Financial performance & risk factors

Its revenue from operations grew at a CAGR of 73.45% from FY21 to FY23. Its EBITDA margin more than doubled from 7.45% to 15.4% over FY21 to FY23, the company said in its DRHP. The company which posted losses in FY21, turned around in FY22.

“Such loss was predominantly due to Covid-19 related lockdown, which resulted in the closure of domestic and export markets, especially educational institutions, offices and workplaces and retail outlets,” the company said.

Source: DRHP

It generates a significant portion of our sales from its top selling product of wooden pencils, which contributed to 31.6% of total sales in FY23.

More than 70% of its sales comes from general trade channels where it sells products directly to super-stockists, who then sell onward to distributors, wholesalers, retailers and more.

Over 60% of its exports business is driven by its Italian partner FILA. It is involved in two material civil litigations — one by it and one against it. One of its civil litigations involves a suit filed against it by Kokuyo Camlin for alleged infringement and passing off of certain designs in relation to mathematical instrument boxes, compasses, and dividers which are registered in the to Camlin.

It also has 9 tax and statutory/regulatory proceedings against it. Its promoters and directors have six cases against them, including criminal and statutory/regulatory proceedings.