The arrival of a new Initial Public Offering (IPO) in the market always sparks curiosity, and the latest one in focus is the IPO of Dooms Industries. As investors, many questions may arise, but the paramount one is whether investing in this IPO is a prudent decision. If you’re seeking a succinct answer, a glance at the grey market premium (GMP) during the creation of this blog reveals a noteworthy GMP of 60%. This indicates that individuals in the grey market are willing to pay a 60% premium for a share of this IPO before it gets listed. A robust GMP often correlates with promising listing gains, as evidenced by recent IPOs like Tata Technologies.
In the current market climate, characterized by a bullish trend, companies tend to go public to capitalize on optimistic sentiments. The surge in IPOs stems from the favorable valuations companies can attain during a bull run, with heightened enthusiasm from potential investors contributing to oversubscription. Now, let’s delve into an analysis of Dooms Industries.
Dooms Industries operates in the R10 stationery sector, manufacturing products such as pencils and razors. The company, established in 2006, has remarkably secured a market share exceeding 12%, even in a highly competitive landscape. Noteworthy competitors include Classmate, Navneet, and Faber-Castell. Despite the cutthroat competition, Dooms Industries not only dominates domestically but also exports its products globally.
Moving on to financials, a critical aspect of investment decision-making, let’s examine key figures. In 2021, the company incurred a loss of ₹6 crores, a setback attributed to the pandemic-induced lockdown. However, in 2022, the financial tide turned, showcasing a profit of ₹17 crores. The momentum continued to surge in 2023, the IPO year, with profits soaring to ₹103 crores. This upward trajectory in profits signals positive momentum for potential investors.
Revenue, the lifeblood of any business, witnessed a commendable surge. In 2021, the company recorded revenue of ₹403 crores, leaping to ₹684 crores in 2022, and reaching a substantial ₹1212 crores in 2023. Such consistent revenue growth signifies the company’s ability to capitalize on market opportunities and expand its market presence.
Assets, another crucial financial indicator, displayed a similar growth pattern. From ₹458 crores in 2021 to ₹497 crores in 2022, the company’s assets further expanded to ₹640 crores in 2023. This upward trajectory reinforces the company’s financial robustness and stability.
Examining the IPO details, Dooms Industries aims to raise ₹1200 crores, primarily through a promoter offer for sale. This means that the promoters intend to sell a portion of their shares, and the proceeds from this sale would go directly to the promoters. Potential investors must grasp the intricacies of fund utilization to make informed decisions.
While the financials portray a positive picture, it’s essential to evaluate the IPO’s valuation. The numbers indicate a significant growth trajectory, but investors must weigh this against the valuation at which the IPO is being offered. A detailed scrutiny of the financial health, growth prospects, and market dynamics is imperative for making an informed investment decision.
The debut of Dooms Industries in the stock market has stirred up a myriad of questions among potential investors. The central query revolves around whether investing in this IPO is a wise decision. Before we delve into the intricacies of the company’s financials and IPO details, it’s imperative to acknowledge the significance of the grey market premium (GMP). As of now, the GMP stands at an impressive 60%, indicating a heightened interest in the market, with investors willing to pay a premium even before the shares are listed. This surge in the grey market often foreshadows positive listing gains, as observed in recent IPOs like Tata Technologies.
Against the backdrop of a bullish market, companies seize the opportunity to go public, seeking favorable valuations amidst heightened optimism. Dooms Industries, operating in the R10 stationery sector, boasts a market share exceeding 12%, a remarkable feat in a fiercely competitive market with notable players like Classmate and Faber-Castell. The company not only dominates the domestic market but also exports its products globally, showcasing a robust market presence.
Turning our attention to the financials, a critical aspect of investment analysis, the company witnessed a loss of ₹6 crores in 2021, attributed to the pandemic-induced lockdown. However, the tide turned in 2022, with profits soaring to ₹17 crores, further escalating to a substantial ₹103 crores in 2023. This upward trajectory in profits signals positive momentum for potential investors.
Revenue, the lifeblood of any business, displayed a commendable surge. In 2021, the company recorded revenue of ₹403 crores, leaping to ₹684 crores in 2022, and reaching a substantial ₹1212 crores in 2023. This consistent revenue growth is indicative of the company’s ability to capitalize on market opportunities and expand its market presence.
Assets, another critical financial indicator, exhibited a similar growth pattern. From ₹458 crores in 2021 to ₹497 crores in 2022, the company’s assets further expanded to ₹640 crores in 2023. This upward trajectory reinforces the company’s financial robustness and stability.
While the financials paint a positive picture, evaluating the IPO’s valuation is paramount. The current P-E ratio stands at more than 43, demanding a considerable premium. The share price is in the range of ₹750 to ₹790, contributing to a perceived expensive valuation. However, it’s essential to consider the company’s growth trajectory. Companies exhibiting substantial growth often command higher P-E ratios. If the growth trend continues, a P-E ratio of 60 or above might be plausible.
The IPO, with an issue size of ₹1200 crores, primarily through a promoter offer for sale, necessitates a closer look at the valuation. Investors must gauge the potential gains against the higher valuation and consider the long-term prospects of the company.
The IPO is open for subscription from the 13th to the 15th, providing investors with a window to apply. However, a prudent strategy would be to monitor the subscription status before applying. Checking the subscription status on Google and through your Demat account ensures that you make an informed decision based on the market response.
Applicants can apply until the 15th, with allotment results expected on the 18th. If allotted shares, credit to the Demat account will occur on the 19th, and the listing is scheduled for the 20th. This timeline allows investors to strategize and assess the gains on listing day.
The IPO comprises 18 shares per lot, with a price range of ₹750 to ₹790. Retail investors are capped at a maximum investment of ₹2 lakhs. The minimum investment for one lot is ₹13,500, but given the expected demand, investing the maximum amount might enhance the chances of allotment.
It’s noteworthy that the P-E ratio, while on the higher side, may not be the sole determinant of investment decisions. The market’s perception of the company, driven by revenue, assets, and profits, plays a pivotal role. A comprehensive analysis, taking into account the company’s financial health, growth prospects, and market dynamics, is essential.
An additional risk factor to consider is the company’s dependence on pencil sales, particularly wooden pencils. Any downturn in this segment could pose challenges. Legal issues, such as an ongoing civil case with a peer, also add an element of uncertainty. Investors must conduct a thorough risk assessment before making investment decisions.
The Dooms Industries IPO presents an enticing opportunity, evident in the robust grey market premium and the company’s commendable financial performance. However, investors must exercise due diligence, carefully weighing the valuation against growth prospects and potential risks. In the dynamic realm of the stock market, informed decision-making is paramount for navigating investment opportunities successfully.
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