Cello World Ltd. share price target

Cello delivered healthy Q2FY26 partially aided by festive buying and favourable base. We note multiple growth drivers are likely to unfold in H2FY26-27 as Re-acquisition of the 'Cello' brand for writing instruments from BIC will allow Cello to leverage its own manufacturing units and distribution to drive market share gains in pens.

Cello World (CELLO) reported a healthy revenue growth of ~20%, largely led by a 23% YoY growth in the consumerware segment. The writing instrument segment also witnessed a healthy recovery (up 17%) after a five-quarter decline.

CELLO has been witnessing muted performance for the last few quarters due to a weak demand scenario amid a consumption slowdown.

Consumerware revenue (69.1% of total revenue) reported soft growth due to early onset of rains, which affected hydration category, while glassware products grew 50%. Writing Instruments faced weak demand in both export and domestic markets, though the company expects demand improvement in FY26 driven by new launches, higher advertising spends to drive market share...

Consumerware revenue (68.7% of total revenue) reported strong growth driven by improved performance in in-house manufactured glass drinkware products, supported by a focus on cost efficiency. Opalware products also performed well during the period. Writing Instruments revenue declined due to reduction in exports, while domestic sales remained flat. CELLO expects revenue momentum to get better with increased capacity utilization at its...

Cello World (CELLO) reported ~15% revenue growth in 4QFY25, driven by improved consumer demand with the onset of early summer and the accelerated growth in quick- and e-commerce segments.

Cello World Diversified product portfolio .............................................................................. 4 Story in Charts ....................................................................................................................................... 7 Investment Arguments....................................................................................................................... 8 Diversified business- Leveraging TAM opportunity ......................................................... 8 Strong brand presence with pan-India network .............................................................. 14 In-house manufacturing & capacity expansion to drive growth ............................... 18 Wim Plast merger to drive profitability ................................................................................ 21 Exploring inorganic growth opportunities .......................................................................... 21...

CELLO reported ~5% revenue growth in 3QFY25, driven by festive demand in the first half of the quarter. However, this was offset by a slowdown in consumption and discretionary spending later in the quarter.

Cello World Ltd (CELLO) has achieved significant success within the writing instrument segment (accounted for ~17% of its consolidated revenue in FY24) following its re-entry into the space in CY19.

CELLO reported revenue growth of 6% YoY in 1QFY25, led by consumerware (up 5% YoY; despite demand headwinds) and moulded furniture & allied product businesses.

Cello reported modest revenue growth of 6.1% YoY (in-line with industry’s growth rate) amid weak consumer demand. Gross margin scaled up to 53.8%.

CELLO reported revenue growth of 5%/11% YoY in 4Q/FY24, led by
volume growth of ~8%/15%. EBITDA grew by 20% YoY in 4Q/FY24 as
margin expanded by 330bp/180bp, aided by lower raw material costs and
a better product mix.

Since its foray into the consumer glassware segment in 2017, CELLO has quickly scaled up this business to generate revenue of INR2.8b vs. a total addressable market (TAM) of INR35b in FY23. The segment will be a key growth driver (26% CAGR over FY23-26) for the company amid evolving applications, capacity expansions in opalware and soda lime glassware, increase in SKUs, and import substitution.

Issue Snapshot: Issue Open: October 30 November 01, 2023 Price Band: Rs. 617 648 (Discount of Rs 61 for all eligible employee) *Issue Size: 29,320,987 eq sh (Entirely Offer for Sale of Rs. 1900 cr including Employee reservation of Rs 10.0 cr) Reservation for: QIB upto 50% eq sh Non-Institutional atleast 15% eq sh ((including 1/3rd for applications between Rs.2 lakhs to Rs.10 lakhs)) Retail atleast 35% eq sh Face Value: Rs 5 Book value: Rs 57.79 (June 30, 2023) Bid size: - 23 equity shares and in multiples thereof 100% Book built Issue IPO Note - Cello World Limited