DOMS Industries IPO: Strong Grey Market Premium Signals Robust Demand

As the eagerly anticipated DOMS Industries IPO approaches, the grey market premium stands as a testament to the strong demand for the company's initial stake sale. Scheduled to open between December 13-15, 2023, DOMS Industries aims to raise an impressive Rs 1,200 crore through its IPO, with shares priced in the range of Rs 750-790 each.

Despite a mild correction, the grey market premium for DOMS Industries remains substantial, currently hovering at an impressive Rs 440-450 per share. This represents a substantial 55-57% increase from the upper end of the price band at Rs 790 apiece, underlining the investor confidence in the company.

Notably, the IPO includes a fresh shares sale of Rs 350 crore and an offer for sale (OFS) of up to Rs 850 crore by its promoter, Fabbrica Italiana Lapis ed Affini SPA, along with Sanjay Mansukhlal Rajani and Ketan Mansukhlal Rajani. Investors can bid for a minimum of 18 equity shares and its multiples, with bidding set to close on Friday, December 13, 2023.

The grey market premium's resilience is expected to be influenced by the opening of the anchor book on Tuesday, December 12. This pre-IPO allocation to institutional investors may further impact the premium, reflecting the market's confidence in DOMS Industries.

Founded in 2006, DOMS Industries is a key player in the stationery and art product sector, boasting a strong market presence with a 29% and 30% market share in pencils and mathematical instrument boxes for the financial year 2022-23. With a global footprint spanning over 40 countries and a robust distribution network across America, Africa, Asia Pacific, Europe, and the Middle East, DOMS Industries has positioned itself as a leader in the industry.

Anand Rathi Research, in its IPO note, highlights DOMS Industries' leadership position in the Indian stationery and art material industry. The company's valuation at the upper price band is at a P/E of 46 times, EV/EBITDA 15.33 times, with a post-issue market cap of Rs 4,793.7 crore. The recommendation is a 'subscribe for long term,' emphasizing the fair pricing of the company's valuations.

In a noteworthy move, DOMS Industries has allocated shares worth Rs 5 crore for eligible employees, offering a discount of Rs 75 apiece during the bidding process. Additionally, the distribution structure reserves 75% of the net issue for qualified institutional bidders, 15% for non-institutional investors, and the remaining 10% for retail investors.

The book running lead managers for the DOMS Industries IPO include JM Financial, BNP Paribas, ICICI Securities, and IIFL Securities, with Link Intime India serving as the registrar for the issue. Share listing on both BSE and NSE is scheduled for December 20, 2023, marking a significant milestone in DOMS Industries' journey.

In conclusion, the DOMS Industries IPO presents an exciting opportunity for investors, backed by a robust grey market premium and a company with a solid market standing and global reach.