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While education companies under our coverage are expected to report 12.2% YoY growth in topline, continued raw material inflation is likely to put pressure on margins. DOMS IN is likely to report 16.5% YoY growth in topline driven by the core stationery business. However, FLAIR IN is likely to report a growth of 4.5% YoY impacted by export headwinds linked to geopolitical tensions in West Asia and production loss arising from excessive rains in Gujarat. Margin pressure is expected to persist given elevated crude-linked input costs, with DOMS IN's EBITDA margin likely to contract 567bps YoY to 11.9% while FLAIR IN's EBITDA margin is likely to decline 296bps YoY to 15.8%. Retain ‘BUY’ on DOMS IN with TP of INR2,783 and FLAIR IN with TP of INR397.

EBITDA margin of DOMS IN to contract by 567bps YoY to 11.9%:

DOMS IN is likely to report 16.5% YoY growth in topline to INR6,614mn in 2QFY27E. The core stationery revenue is likely to grow by 16.5% YoY to INR6,064mn. On the other hand, hygiene business is expected to report a revenue growth of 16.0% YoY to INR550mn. EBITDA margin is likely to contract by 567bps YoY to 11.9% on the back of raw material inflation. We cut our EPS estimates by 6% for FY27E on the back of weak margin performance anticipated in 2QFY27E. We retain ‘BUY’ on the stock with TP of INR2,783 as we roll forward our valuation to Sep-28E (45x Sep-28E EPS; earlier 50x).

FLAIR IN’s topline growth under pressure:

We expect FLAIR IN’s topline to increase by a modest 4.5% YoY to INR3,354mn amid weak export performance due to the geopolitical challenges in West Asia and production loss arising from excessive rains in Gujarat. On the other hand, EBITDA margin is expected to contract by 296bps YoY to 15.8%, reflecting the impact of rising crude derivatives. We retain ‘BUY’ on the stock with TP of INR397 as we roll forward our valuation to Sep-28E (21x Sep-28E EPS; earlier 23x).

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