Why Ambit Prefers Flair Writing Over Doms Industries; Check Rating, Targets & More

Brokerage patient Ambit has shared its views connected stationary stocks including DOMS Industries and Flair Writing Industries. However, while it has a 'sell' standing connected nan erstwhile one, suggesting a 25 per cent downside, but it is affirmative connected nan second one, indicating a 56 per cent upside imaginable successful nan counter.
 

The Indian stationery market, weighted astatine astir Rs 35,000 crore, remains a move assemblage pinch penning and imaginative instruments occupying a niche full addressable marketplace (TAM) of astir Rs 10,000 crore. Despite precocious introduction barriers, nan assemblage offers important opportunities for branded players to summation marketplace stock done premiumization and shifting user perceptions towards style and utility. These dynamics coming a level for growth, though players look little pricing powerfulness compared to different FMCG sectors, said Ambit.

Ambit's caller study highlights DOMS and Flair arsenic leaders successful nan penning instruments category, pinch a gross compound yearly maturation complaint (CAGR) of 23% and 14% respectively from FY15-24. DOMS has established power successful nan pencil and scholastic segments, while Flair leads successful pens. The study assigns a waste standing to DOMS owing to fierce marketplace expectations, whereas Flair is rated a buy, fixed its reasonable valuations and maturation potential.

Premiumization is identified arsenic a captious maturation driver successful nan industry, pinch nan Indian penning instruments marketplace being highly penetrated. However, it ranks little successful maturation imaginable compared to different FMCG categories. The market's description is expected to beryllium propelled by changing perceptions among consumers who progressively position stationery arsenic a style connection beyond specified utility. Brand innovation, value products, and robust distribution networks are underscored arsenic cardinal occurrence factors successful this evolving landscape.

The non-paper conception of nan stationery market, weighted astatine astir Rs 18,000 crore, offers charismatic dynamics pinch patient profit margins and returns connected superior employed. DOMS and Flair, alongside different branded players, person gained important marketplace stock from unorganised competitors by focusing connected high-quality, cost-effective products. The pencil industry, successful particular, is mostly controlled by DOMS and Hindustan Pencils, which together seizure much than 80% of nan market.

Valuations for DOMS and Flair disagree significantly, pinch DOMS trading astatine astir 75x its guardant one-year P/E ratio, reflecting its near-term maturation prospects. Flair, connected nan different hand, trades astatine a much reasonable 19x guardant P/E, pinch imaginable for re-rating arsenic maturation revives. Ambit anticipates continued marketplace stock gains and description into adjacent markets for some companies, highlighting scalability prospects contempt existent challenges.

Industry leaders are encouraged to support accordant innovation, attraction connected quality, and guarantee wide distribution networks to maximise maturation opportunities. While Flair is seen arsenic having imaginable for betterment and re-rating, DOMS faces unit to meet precocious marketplace expectations. The study suggests that occurrence successful expanding beyond nan accepted stationery offerings could unlock further profitability for these companies, nan brokerage noted.

Ambit has a 'Sell' standing connected DOMS pinch a target value of Rs 2,250, while it has a 'buy' standing pinch a target value of Rs 400 connected nan stock. Shares of DOMS Industries were trading astir Rs 3,000 connected Wednesday, while Flair Writing was astir Rs 260.