Buy DOMS Industries; target of Rs 2604: Prabhudas Lilladher

What happened

Prabhudas Lilladher maintained a Buy recommendation on DOMS Industries and kept its target price at Rs 2604. It cut its FY28E and FY29E earnings-per-share estimates by about 6% because of volatile raw-material prices, while reporting that sharply higher input costs had reduced the company’s EBITDA margin.

Confirmed

Global impact / market context

The report links raw-material inflation to lower profit per sale, which can limit earnings even when revenue is broadly in line with estimates. Its expected recovery depends on crude-linked input costs easing; if that happens, improved margins and new building capacity could support future earnings growth.

Analyst inference

The broker’s valuation case assumes margins recover as crude-linked input inflation eases, while new buildings add production capacity. If those conditions hold, higher output and lower input-cost pressure could support profit per sale; if not, earnings estimates and the target valuation may face pressure.

Analyst inference

What to watch

1. Track crude-linked raw-material prices: the broker says easing inflation could enable margin recovery, while persistent cost pressure may keep profit per sale below its forecasts. Analyst inference
2. Check whether the first Umbergaon building is commissioned and adds volumes; the report says two more buildings also have machinery installation underway for future capacity. Confirmed
3. Compare reported margins and earnings with the broker’s recovery path and revised estimates, since slower improvement could weaken the basis for its unchanged target price. Analyst inference

Evidence

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