DOMS Industries Limited, a leading player in the Indian stationery and art products market, has filed its draft red herring prospectus (DRHP) with market regulator Securities and Exchange Board of India (SEBI) to raise ₹1,200 crore via initial public offering. The pencil maker is the third company in the stationery sector to file for an IPO recently after pen makers Flair Writing Industries and Cello World. While Mumbai-based pen manufacturer Cello World submitted its paper with SEBI to raise ₹1,750 crore via IPO route, Flair proposes to garner ₹745 crore through public listing of shares on the stock exchanges.
DOMS’ IPO comprises a fresh issue of equity shares worth up to ₹350 crore and an offer for sale (OFS) aggregating up to ₹850 crore. The OFS will see corporate promoter, F.I.L.A. selling equity shares worth up to ₹800 crore, while domestic promoters Sanjay Mansukhlal Rajani and Ketan Mansukhlal Rajani will be offloading shares worth ₹25 crore each. F.I.L.A., a listed Italian multinational company engaged in the supply of various ‘art materials’ and ‘stationery products’, entered into a strategic partnership with the company in 2012 and currently holds a 51% stake in the DOMS.
The Gujarat-based company intends to use funds raised through the fresh issue to fund the cost of establishing a new manufacturing facility, to expand the company’s production capabilities for a wide range of writing instruments, water colour pens, markers, and highlighters, as well as for general corporate purposes.
The country’s second-largest pencil maker that sells products under DOMS brand plans to raise ₹70 crore in pre-IPO placement ahead of the filing of the red herring prospectus with the market regulator. If the pre-IPO placement is completed, the company may trim the size of the fresh issue to the extent of such pre-IPO placement, as per the prospectus filed with the SEBI.
On the financial front, the company reported net profit of ₹102.87 crore in the financial year 2023, a sharp jump of 500% over profit of ₹17.14 crore in previous fiscal. The revenue from operations surged 77.3% to ₹1,212 crore in FY23 versus ₹683.6 crore in previous financial year. DOMS claims to be the fastest growing stationery and art material products company in India in terms of revenue over the period from fiscal 2020 to fiscal 2022.
India is expected to become a $313 billion education market by 2030. In the backdrop of rising demand for education in India, there has been a tremendous growth in the number of schools, colleges, and other educational institutes over the years in India, which in turn is going to drive the demand for stationery products. The Indian stationery and art materials market has an estimated size of ₹38,500 crore by value as of FY23 and is expected to grow at a CAGR of around 13% during FY23-FY28 period to reach a market value of ₹71,600 crore by FY28.
JM Financial Limited, BNP Paribas, ICICI Securities Limited and IIFL Securities Limited are the Book Running Lead Managers to the issue. Marathon Capital Advisory Private Limited and ITI Capital Limited have been appointed by the Company as the corporate advisors.
The company designs, develops, manufactures, and sell a wide range of stationary and art products, primarily under the flagship brand ‘DOMS’ and sub brands C3, Amariz and Fixy Fix in the domestic market as well as in over 40 countries internationally, covering the U.S., Africa, Asia Pacific, Europe, and Middle East belt. The product categories which include over 3,770 SKUs, are classified into seven categories including scholastic stationery, scholastic art material, paper stationery, kits and combos, office supplies, hobby and craft and fine art products.
As of FY23, the firm’s core products such as pencils and mathematical instrument boxes enjoy a market share by value of 29% and 30%, respectively, as per the company. While the product offerings have evolved significantly over the past several years, the largest product ‘pencils’ contributed 31.66% of the gross product sales amounting to ₹390 crore in the fiscal 2023.
The company has 11 manufacturing facilities, which are located in Umbergaon, Gujarat and in Bari Brahma, Jammu and Kashmir. The company has a widespread multi-channel distribution network, which comprises over 100 super-stockists, and 3,750 distributors along with a dedicated sales team of over 450 personnel covering more than 115,000 retail touch points across 3,500 cities and towns. The company also caters to consumers through modern trade and e-commerce.
DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.
