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  • Writer's pictureJatin Agarwal

Cello World IPO


cello world logo

Company and IPO Overview:


Cello World is a leading company in the consumerware market in India, with presence in three product categories: consumer houseware (66 per cent of FY23 revenue), writing instruments and stationery (16 per cent), and moulded furniture and allied products (18 per cent). The company is the sole manufacturer, distributor, and marketer of Cello products in India. It has 13 manufacturing facilities across five locations in India.


Cello World has a track record of scaling up new businesses and product categories. Cello launched its glassware and opalware business in 2017 under the ‘Cello’ brand, also launched the writing instruments and stationery product category in 2019 under the ‘Unomax’ brand, and launched its cleaning aids business in 2017 under the ‘Kleeno’ sub-brand (under the ‘Cello’ brand). As of 30 June 2023, Cello World offered 15,891 stock-keeping units (SKUs 1) across its product categories.


Cello World IPO is also a main board IPO which is ready to go public, the company is about to raise around ₹ 1900 crores via IPO comprising Offer For Sale (OFS) only. The price band of the issue is ₹ 617 to ₹ 648 with a minimum market lot of 23 shares. Cello World Limited IPO subscription quota for retail is 35.00%, NII is 15.00% and QIB is 50.00%. The company is also allowing an employee discount of Rs 61 per share.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

1060

166

31/03/2022

1375

220

31/03/2023

1813

285


Objectives of the Issue:

1. The company will not receive any proceeds from the Offer and all the Offer Proceeds will be received by the Selling Shareholders, in proportion to the Offered Shares sold by the respective Selling Shareholders as part of the Offer.


IPO Details:

IPO Date

30/10/2023-01/11/2023

Face Value

₹5 per share

IPO Price Band

₹617-₹648 per share

IPO Lot Size

23 Shares

Listing at

NSE, BSE

Basis of Allotment

06/11/2023

Credit of Shares in Demat

08/11/2023

Listing Date

09/11/2023

Pre-Issue Shareholding

100%

Post-Issue Shareholding

91.8%

Retail Minimum Lot Size

23 shares (₹14,904)


Valuations & Margins:

Indicators

FY 21

FY 22

FY 23

EPS

7.75

10.46

13.17

P/E

-

-

49.2

EBITDA (%)

27.34

25.71

24.34

ROCE (%)

58.73

40.92

44.48


Important things to note about the Company:


Top reasons to consider the IPO:


1. Cello World has established itself as a prominent player in India’s consumerware market. The company’s strategic approach of initially offering affordable products and gradually expanding into value-added, higher-priced items has solidified its market position.


2. The manufacturing capabilities allow it to produce a wide range of products in-house, contributing to 80% of its revenue. This reduces its dependence on third-party products.


3. Cello World boasts a strong distribution network with 721 sales members and over 60,000 retailers across India. Its effective marketing strategies and product branding have helped in developing a strong brand identity.


4. As of 2023, Cello World offers 15,891 SKUs across various product categories, catering to diverse consumer requirements. This diversified portfolio enables Cello World to serve as a “one-stop-shop” for consumers across all income levels.


Risk Factors to watch out in the IPO:


1. Cello World relies heavily on its distribution network in India and overseas to sell and distribute its products. Any inability to maintain and grow this network could hinder the effective reach of its products to consumers, leading to a potential loss of market share.


2. Cello World is entirely dependent on third-party suppliers for the supply of raw materials, including plastic granules and plastic polymers. Fluctuations in raw material prices could significantly affect the company’s expenses and, consequently, its profit margins.


3. The success of the business hinges on its ability to anticipate consumer demand and maintain optimal inventory levels. Failure to identify and respond to changing consumer preferences in a timely manner could decrease product demand, affecting business operations.


4. While Cello World constantly innovates to develop new products, there is always a risk that these new product initiatives may not be as well-received by consumers as anticipated. This could potentially impede the company’s growth objectives and adversely affect its business.


Crisp Insights:

  • Cello World IPO GMP Today: The Company is commanding a GMP of Rs.125

  • Cello World GMP is good and hence, listing gains are possible.

  • Cello World IPO Review: Cello World holds a strong market position in India’s consumerware market with its diverse product categories, material types, and price points. However, based on its recent financial performance, the issue is priced aggressively discounting all near term positives. In general investors do not prefer complete OFS issues. Only well-informed/cash surplus investors may park moderate funds for medium to long term.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.

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