Pencil maker DOMS preps ₹1,200 cr IPO as mkt swells

MUMBAI : DOMS Industries, India’s second-largest pencil maker, is about to file draft papers for a 1,200 crore preliminary public providing (IPO) with the Securities and Trade Board of India (Sebi) within the second week of August, two funding bankers conscious of the event mentioned.

Italy’s F.I.L.A. Group, which owns a 51% stake in DOMS, plans to supply shares value 800 crore within the situation. The corporate’s Indian promoters embody the Raveshia and Rajani households.

The corporate will use the proceeds to ascertain one of many largest single-location manufacturing amenities within the stationery business throughout the Asia Pacific area. It has allotted a capital expenditure of 800 crore for a similar in the course of the interval from FY23 to FY28, one of many funding bankers mentioned. The funding goals to transition the present plant from leased to owned amenities, enhance manufacturing capacities, set up vegetation for brand spanking new merchandise, and refurbish older equipment.

The corporate has employed JM Monetary Ltd, ICICI Securities Ltd, IIFL Capital Ltd, and BNP Paribas as bankers to the difficulty.

DOMS would be the second firm within the stationery business to file for an IPO not too long ago. Earlier this month, pen-maker Aptitude Writing Industries Ltd filed preliminary papers with Sebi to lift 745 crore by way of an IPO.

A question emailed to DOMS remained unanswered.

The stationery market has surged after the covid-19 pandemic, as evident from a 77% enhance in income for the pencil maker, which closed FY23 with a income of 1,212 crore, in opposition to 683 crore in FY22. This development was primarily pushed by robust demand for his or her pencil phase, resulting in a considerable quantity enhance of over 59%.

In response to a Crisil report, DOMS’ income development has resulted in better-fixed price absorption, permitting the corporate to extend costs and obtain an estimated working margin of over 15% for FY23.

DOMS at the moment boasts a capability of 6.5 million pencils per day, making it the second-largest after Hindustan Pencils Pvt. Ltd, the maker of Natraj and Apsara pencils.

Earlier this 12 months, DOMS acquired a 30% stake in toy maker Clapjoy, increasing its presence into new segments.

The corporate has a community of over 100 tremendous stockists, 3,500 sellers or distributors, and over 100,000 wholesalers and retailers. Working beneath two manufacturers, DOMS and C3, it caters to each premium and economic system segments.

In response to Crisil, the corporate has a snug capital construction and debt safety metrics. Its restricted reliance on exterior debt for working capital and capex wants has resulted in a low complete exterior liabilities to adjusted web value (TOLANW) estimated at 0.86 occasions on a wholesome web value base, estimated above 340 crore as of 31 March 2023. Its debt safety metrics are wholesome, with an curiosity protection ratio and web money accruals to adjusted debt estimated above 15 and 1.35 occasions, respectively.

With estimated money accruals of over 130 crore in FY23, DOMS had money and money equivalents of 40 crore as of 31 March 2023 and is projected to generate money accruals of over 160 crore over the medium time period. It additionally has entry to fund-based limits of 67 crore, with utilization at 37% on common over the 12 months ended March 2023. Crisil Rankings believes the group has adequate accruals and money and money equivalents to satisfy the time period debt reimbursement, part-finance its capex necessities, and fulfil incremental working capital wants subsequent 12 months.

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Up to date: 31 Jul 2023, 12:19 AM IST

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