Stationery stocks jump up to 5% after Nuvama initiates coverage

DOMS has multi-hued growth plans in the kids-focused segment and steadfast top-line trajectory and a lean balance sheet, said the brokerage. On Flair, it said the stock has been valued by factoring in its superior margins and diversification into new segments, which promise needle-moving outcomes.

Nuvama added the premium for DOMS versus Flair is led by superior growth prospects.

“We estimate DOMS to report revenue/PAT CAGR of 25%/35% over FY23–26 versus Flair to report revenue/PAT CAGR of 13%/15%,” it said.

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is the market leader in stationery and arts but it is focussed on paper stationery (20% in FY23). DOMS is a close second with a 12% market share and boasts the most diverse set of offerings. Flair’s forte is its widest distribution footprint in the country comprising 7,700 distributors and 315,000 retailers, report added.

DOMS, according to Nuvama, has been scripting a story of business acumen and innovation, thereby topping the FY17–23 revenue CAGR at 20%. By EBITDA margin, however, Flair rules at 19.5%. Overall, DOMS has the most diverse range and turns in the best returns ratios along with working capital, courtesy of its balance sheet.

“While we like DOMS for its strong growth led by the widest product basket, high brand recall, integrated manufacturing facility and partnership with FILA, we also appreciate Flair for its presence in the high-growth writing instruments space with a strong market share, largest distribution network, consistently high profitability and a clear vision to diversify into adjacent segments.”, says Sneha Talreja, Analyst at Nuvama Wealth.

While the stationery and arts segment is likely to see strong growth, investors should look out for risks like constant digitalisation, intense competition, environmental issues, raw material price volatility, and threats from the unorganised sector, said Nuvama.

Flair Writing Industries listed on the exchanges in November 2023 at Rs 503, at nearly 40% premium whereas DOMS was listed in December 2023 at Rs 1400, at a premium of nearly 50%. The shares of DOMS industries are currently trading 123% above its issue price while Flair is trading at 1.6% below the issue price.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)