#PAT #MARGIN

In FY25, the PAT margin contracted by 165 bps YoY to 8.5%. The energy costs in Europe witnessed some softness. The benefit of the reduction in energy costs would likely to reflect in the coming quarters. The PAT margin over the years expanded on account of expansion in operating profit margin. In 9M FY25, the PAT margin contracted by 256 bps YoY to 7%.

#ROCE

In FY25, the ROCE declined to ~12.3% because of increase in capital employed. Capital employed increased because of high increase in retained earnings. In FY25, SRF invested ~₹700 cr towards various debottlenecking and expansions projects in chemicals business. Capacity addition, new products launch supported by strong R&D capability in chemicals segment, growing contribution of value added products in the performance films & foil business and market leadership in most of its products has helped in improving operating profit and return on capital employed of the company.

#ROE

In FY25, the return on equity declined to 10.4%. This was led by decline in net profit. Over the years, the return on equity increased supported by continued capital expenditure for new products & capacity expansion in the growing & high margin products and geographical expansion. The company new product portfolio is being enhanced continuously, which also helped to expand and strengthen its customer base further for the chemical business and increase the overall profitability of the business. No single customer contributed 10% or more to the group’s sales.

#COMPANY #POTENTIAL

Chemicals: • The fluorochemicals (chemicals containing fluorine) have vast applications like agrochemicals, pharmaceuticals, refrigerants, automobiles, electrical and electronics and many others. While some applications like old generation refrigerants are getting phased out, new applications in semiconductors, electric vehicles are emerging. • Applications in agrichemicals and pharma products are growing faster than other segments given that 30% of drugs and 50% of The grocrop protection products under development contain fluorine, as per Solvay. • Growth in the fluorine-based intermediates segment will be the highest with a CAGR of 16.1%, with India moving towards inhouse manufacturing of many actives and intermediates which were other wise imported from China. Packaging films: convenient and light packaging. • BOPP and BOPET films demand stood at 6.54 million tonnes in FY20 and is anticipated to reach 11.27 million tonnes by FY30, growing at a CAGR of 5.6% until FY30. • BOPP and BOPET films market is projected to grow at a steady CAGR due to the rise in the packaging industry. The high demand to replace the traditional packaging types including metal cans and cartons coupled with the shift in consumer preference for • BOPP and BOPET films are the polyester films that are majorly used for packaging, labeling, and lamination. These films are majorly used in electrical and electronics, pharmaceutical, medical and personal care.

#COMPANY #OUTLOOK

Chemical business:

• The management expects 20% growth in the chemical business, going forward. It expects ~₹11,000-₹12,000 cr of revenue by FY28 in the chemical business. The split of specialty chemicals business and fluorochemicals business would remain in the similar range. • It expects chemical business EBIT margin to be in the range of ~25%-26%. • The company expect to see full benefit of the extended capacity by FY27 in speciality chemical business. • The company anticipates good growth in the fluoropolymers business in FY26. It expects India and Middel East to drive growth for the refrigerants business. healthy order book in the new locations as well. • In FY26, the management expects the hydrofluorocarbons (HFCs) capacity utilization to improve to ~85%-90% from the current levels of ~70%. • SRF continued to grow its global market share of R134a pharma grade gas marketed under the Dymel brand with presence in India, Bangladesh, Argentina, and Thailand. It is further expanding to new geographies such as Greece and Taiwan and have a • The company has also started working on the next range of industrial chemicals. This will open up new areas of growth beyond the chloromethane chain.

Performance Films & Foil business:

• In Q4 FY25, the margins improved for both BOPET (biaxially oriented polyethylene terephthalate) and BOPP (Biaxially oriented polypropylene) due to increased capacity utilization driven by rising demand. • The company is focusing on profitability, by commercializing new value-added products (VAPs) and boosting sales of high-impact VAPs. • Currently, the capacity expansion of 50,000-55,000 MTPA (metric tonnes per annum) is progressing as per the plan. • The company’s overseas operations improved during the year, led by better performance in the Hungary unit. Technical textile business:• The management expects the newly commissioned aluminium foil facility to contribute positively to the overall performance. It expects demand from electric vehicle (EV) and air conditioner (AC) frames application segment. •

Technical textile business:

In Q4 FY25, the demand for polyester tyre cord fabric and polyester industrial yarn (PIY) remained robust, while volumes of nylon tyre cord fabric was flat. The performance of belting fabrics (BF) was affected by the influx of low-cost imports from China, which had an impact on the overall performance of the business. • During the quarter, the company successfully commissioned the full capacity expansion for belting fabrics. • The management expects the demand for belting fabrics to grow in the near future on account of increased government focus on infrastructure development. • The polyester Industrial Yarn demand is expected to increase supported by geo-textiles and seat belts

SRF 2450-2650
Expected level 3100
Support 2300

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DOMS Industries company details report

DOMS’ consol sales grew by c.25% with organic sales growth of c.17% (tad lower vs its guidance of 18-20%). However, this was predominantly driven by capacity constraints (no major capacity addition happened in scholastic stationary/art material in FY25 & some delay in construction activities) and demand has not been a challenge. With addition of lines (for pens, pencil processing, paper stationary, etc.) in existing infrastructure and new greenfield capacities coming up from end of FY26, the supply side challenges should ease. This apart, DOMS has been widening its portfolio (launch of back to school range, DOMS tots range, adhesives, fine arts, paper stationary), which we believe should enable it to achieve organic revenue growth guidance of c.18-20% p.a. over medium term. EBITDA margins are likely to be within guided range of 16.5-17.5%, as focus remains on increasing market share. Going ahead pace of commissioning of new capacities will be key for acceleration in writing instruments. Execution on Paper stationary & Uniclan business (distribution expansion) over medium term will be another key monitorable. We like DOMS brand strength, R&D capabilities, fully backward integrated manufacturing setup and promoter’s ability to leverage these tools to create new growth engines and get product & pricing right. This we believe will enable it to continue outperforming industry growth

Widening portfolio & creating new growth engines leveraging its innovation/R&D expertise:

One of the key strengths of DOMS has been its innovation capabilities in the stationary segment and it continues to remain agile in this aspect – visible from launch of Tots range, widening of its Pens portfolio, launch of back to school range (bags), value added offerings in kits & combos, adhesives range, markers, mechanical pencils & fine art products. DOMS’ R&D and backward integration strength to provide a value for money offering has been instrumental in creating newer growth opportunities, gaining market share in core categories & outperforming peers in stationary segment.

Capacity expansion to ease supply challenges and drive organic growth:

Core stationary segment growth saw some moderation in 4QFY25 vs historical trends – this in our view was primarily driven by capacity constraints (currently at c.90% utilization for core categories) and not any demand side issues. Historically too, capacity has been a challenge for DOMS & it has been investing behind adding lines across categories. Apart from expanding at the existing infrastructure (from 22 acres to 26-27acres, added injection molding machines for pens), the construction of 44 acre greenfield capacity is also under progress (first building to commercialize in Mar/April’26). Overall capex for greenfield project is c.INR 10bn (INR 2.2-2.3bn p.a in FY26/27E) & in normalized scenario, the asset turn achievable in this business is c.3x. Phase wise capacity expansion is being undertaken in core categories in FY26 – Pencils (from 5.5mn pencils/day to 8 mn/day), Pens (from 2.2 mn pens/day to 3.2-3.5mn pens/day by Mar’26) and Paper stationary (new line added in Pioneer & acquisition of Super tread). This we believe should ease supply challenge which along with continued innovation intensity across categories should help achieve its organic sales growth guidance

Enough headroom to scale up in Pens; well placed to capitalize on opportunity with capacity & portfolio in place:

DOMS’ has clear demonstrated its execution capabilities (sales up 3.5x over FY23-25, accounting for c.7% of gross stationary sales) in a competitive and large category (market size of INR 100bn) like Pens. Company had entered this category around two years back, when key industry players decided to exit INR 5 price point. DOMS saw this as an opportunity to enter a large category, leveraged its strong R&D capabilities and created superior product offering at a value for money price point (for e.g.: Gel pen at INR 5). The range has been well accepted, visible from its strong growth in this segment. Also, despite majority range being at INR 5, the profitability in this segment is similar to company level margins. Moreover, headroom for growth remains immense - DOMS’ pens are still not launched pan-India (present only in c.50% of the market) and market share is still in low single digits. With capacities getting added (3.2-3.5mn pens/day by Mar’26 & aspiration to reach 10mn in another 2 years), we expect strong traction in this category to continue & it will remain one of the key revenue drivers for DOMS over medium term.

Paper stationary – Capacity additions to help tap large TAM:

Segment offers large growth opportunity (market size of INR 100 bn with DOMS’ market share in low single digits). DOMS entered in this segment through acquisition of Pioneer stationary Ltd in FY16. Over the years, revenue has scaled significantly from INR 45 mn to INR 1.6bn (in FY24) – led by a combination of category expertise of existing promoters of Pioneer and DOMS’ brand/distribution strength. While business margins are lower & entails higher working capital (higher credit period) vs conventional stationary products, the TAM is much larger to be ignored. Also, focus here is more on kids/back to school products where it has right to win and can leverage its brand & distribution strength. Capacities have been added in Pioneer (20% increase in Oct’24); recent acquisition of Super Treads (West Bengal based paper manufacturing entity) will further increase overall capacity by another 30% and also enable to widen geographic presence in a more cost efficient manner.

Strengthening distribution infrastructure:

Apart from working on portfolio and capacity expansion, DOMS has also been focusing on expanding & driving efficiencies in its distribution. Currently, it has total reach of 140k stationary outlets with direct reach to 125k outlets. It plans to reach at least 175-200k outlets directly over the medium term & balance universe (another 100-150k) will be served through wholesale channel. This apart, in order to increase thruput per store, DOMS has increased its sales team strength & created separate sales lines – existing sales team continuing with core stationary products and additional sales line for its new product segments which are Pens, Paper stationary, and Adhesives. Also, to ensure better visibility on secondary sales, it is onboarding c.30% of distributors (which account for large part of its sales) onto DMS system.

Pencils & Pens Production capacity

New Lauching

Most Selling products portfolio