IPO listed on 6 Nov'23
Cello World Ltd
Minimum Investment
₹ 14,904 / 23 shares
Grey market premium
₹ 135 (21% premium)
Issue price
₹ 648
Listing price
₹ 829
Listing gains
181 (28%)
Listing on
Nov 06, 2023
Our Verdict:
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- Cello World has consistently showcased impressive growth by expanding into new business areas and product categories, backed by a solid brand heritage. Additionally, it is well-positioned to capitalize on the uptrend of increasing incomes, growing nuclear families, and the transition from the unorganised to the organised sector.
- From a valuation perspective, the P/E ratio stands at 48x, a tad above its industry counterparts. Nevertheless, Cello outperforms its competitors in terms of profitability and return metrics. Moreover, the company's future growth is anticipated to be strong, fuelled by a healthy demand forecast, a powerful brand name, and forthcoming expansion initiatives in Rajasthan. Additionally, the grey market premium (GMP) for the IPO also suggests a premium listing.
- Considering all these factors, investors may consider subscribing to the issue from a long-term perspective.
About the company
Founded in
25 Jul'18
Managing director
Pradeep Rathod
- Cello World stands out as a leading name in India's consumer-ware sector, offering a diverse array of products spanning consumer houseware, writing tools and stationery, as well as moulded furniture and related items. In recognition of its prominence, the "Cello" brand was distinguished as one of India's most trusted brands in 2021 by Commerzify.
- Boasting a broad spectrum of products across varied categories, materials, and pricing, Cello World positions itself as a comprehensive go-to destination catering to consumers of all financial standings. As of June 30, 2023, their product range encompassed a remarkable 15,891 SKUs across these categories.
STRENGTHS
- Robust Financial Track Record: Between FY21 and FY23, Cello World showcased a commendable growth pattern, registering a CAGR of 31% in Revenue, 23% in EBITDA, and 31% in Net Profit.
- Impressive Return Indicators: In FY23, the Return on Equity was at a striking 40%, and the Return on Capital Employed reached 44.5%, outperforming many of its competitors.
- Leading Market Presence: Cello World has firmly established itself as a top-tier manufacturer in areas such as houseware, insulated-ware, electronic gadgets, and cleaning tools. It held an 8% market share in the branded consumer-ware sector for FY23.
- Expansive Distribution Across India: The company's extensive distribution network spans the entirety of India, facilitating the effective introduction of various products. This nationwide reach is executed via a dedicated sales force comprising 721 members.
- Healthy Balance Sheet: The firm boasts positive cash flows and maintains relatively low amounts of indebtedness. The net debt-to-equity ratio stood at 0.3 times as of June 2023.
RISK FACTORS
- Declining Profitability Margins: The company has observed a consistent drop in its profitability ratios. The EBITDA margin dropped from 27.3% in FY21 to 25.7% in FY22, and further to 24.3% in FY23.
- Volatility in Raw Material Costs: The primary raw materials used by the company are plastic granules and polymers, accounting for nearly half of all raw material expenses. Given that plastic prices are largely influenced by crude oil, being its derivative, any unpredictability in crude oil prices can potentially impact the company's margins and overall profitability.
- Lack of Trademark Ownership: Cello World does not possess the trademarks for its principal brands like Cello, Unomax, Kleeno, and Puro. These brands are only licensed to them. If future contract renewals are unfavourable or non-existent, it could have adverse effects on the company's profit margins.
- Significant working capital needs: Cello’s working capital requirements are nearly twice that of their industry counterparts. This is due to a combination of factors: an extensive inventory owing to their vast product range, longer debtor days since they don't employ channel financing for debtors, and shorter creditor days to secure more favourable credit terms.
Issue details
Issue type
Mainstream
Issue size
₹ 1,900 crore
Fresh Issue
₹ -
OFS
₹ 1,900 crore
Price range
₹ 617 - 648
Lot size
23 shares
Issue Objective
This issue is a pure Offer for Sale (OFS), which means the company will not receive any proceeds from the offer. All the offer proceeds will be received by the selling shareholders, in proportion to the shares sold by them.
Dates
Bidding open
30 Oct'23
Bidding close
1 Nov'23
Allotment date
2 Nov'23
Refund date
3 Nov'23
Listing
6 Nov'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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