Cello World IPO Review

Cello World IPO entails mobilizing Rs 1,900.00 crores. The issue is entirely an offer for sale of 2.93 crore shares. Cello World is a reputed consumer product company mainly dealing in writing instruments and stationery, molded furniture, consumer housewares and related products.

IPO opensOct 30, 2023
IPO ClosesNov 1, 2023
IPO Size (Rs.)₹1,900.00 Cr
IPO Size (shares)29,320,987 shares
BreakupOFS only
Face Value:₹ 5/-
IPO Price in Rs :₹617 to ₹648
Minimum Lot23 Shares
Listing AtNSE , BSE
Anchor & QIB Quota50%
NII Quota15%
Retail Quota35%
 Lead ManagerKotak Mahindra Capital , JM, IIFL,  ICICI Securities
RegistrarLink Intime

About Cello World:

  • Cello World Limited is a leading company in the consumerware market in India. The company has grown to become one of the largest consumerware brands in the Indian market.
  • Cello World primarily is in three major categories:
    • Consumer Houseware
    • Writing Instruments and Stationery
    • Moulded Furniture and Allied Products
  • They have 13 manufacturing facilities across five locations in India.and is establishing a glassware manufacturing facility in Rajasthan.
  • As of June 30, 2023, the company offered 15,891 SKUs across its product categories
  • Company’s manufacturing capabilities allow it to manufacture a diverse range of products in-house
  • The company trades in houseware, insulated ware, electronic appliances and cleaning aids products.
  • Sales team of 721 members and marketing team of 24 employees.

Financials: Cello World IPO

Particulars / Rs. In crore2023(03)2022(03)2023(12)2022(12)2021(12)
Revenue from Operations471.78432.611,796.701,359.181,049.46
Revenue Growth (%)9.05%32.19%29.51%
EBITDA Margin (%)26.98%23.29%24.34%25.71%27.34%
Profit before Tax114.9288.67385.2299.1235.69
Net Profit for the period82.8366.03285.06219.52165.55
Net Profit Margin (%)17.56%15.26%15.87%16.15%15.77%
Share Capital97.
Net Worth1,226.66495.76665.73444.04289.59
RONW (%)6.31%12.48%39.98%45.94%52.21%
Net Asset Value (₹)57.7925.4234.1422.7714.85
ROCE (%)8.06%11.28%44.48%40.92%58.73%
Post issue Share Capital106.1    
IPO price648.0    
EPS Fy2313.4    
PE Fy2348.2    
EPS Fy24 (annualized)15.6    
PE Fy24  (annualized)41.5    
Market cap in Lacs13,750.6    
Market Cap/sales7.7    

Anchor: Cello World IPO

Cello World has raised ₹567 crore from anchor investors ahead of its IPO. It allocated a total of 86.5 lakh equity shares to 39 funds. Morgan Stanley Asia (Singapore) Pte Ltd, Ashoka India, Godman Sachs, BNP Paribas Arbitrage, CLSA Global Markets Pte Ltd, Reliance General Insurance Company, Bajaj Allianz General Insurance Company, ICICI Prudential Mutual Fund, Edelweiss MF, Tata MF and HDFC MF are among the anchor investors

Cello World IPO: Salient Points

  • The promoters hold 92% of the company, which will get diluted post the IPO to 78%. 
  • Promoter Pradeep Ghisulal Rathod shall offload ₹300 crore worth of shares, ₹736 crore by Pankaj Ghisulal Rathod, ₹464 crore by Gaurav Pradeep Rathod, ₹200 crore by Sangeeta Pradeep Rathod, ₹100 crore by both Babita Pankaj Rathod and Ruchi Gaurav Rathod.
  • The Indian consumerware market size increased from ₹305 billion in Fiscal 2020 to ₹348 billion in Fiscal 2022, at a CAGR of 6.9%. As of Fiscal 2023, the Indian stationery market had an estimated size of ₹385 billion by value. In the branded consumerware market, they occupied a market share of 8% for the Financial Year 2023. The market share was 4.9% in the overall consumerware market for the same period
  • Cello has a strong market position in consumer products, reflecting their vast experience, continuous product development and consumer understanding.
  • The six decades of experience of the company’s promoters (through their family) in the consumer products industry has enabled them to understand the preferences and needs of consumers in India, diversify the product portfolio and grow their multi channel distribution network
  • Cello World has demonstrated a track record of scaling up new businesses and product categories like the launch of the glassware and opalware business in 2017 under the “Cello” brand. They also launched their writing instruments and stationery product category in 2019 under the “Unomax” brand, Further, they were involved in the launch of the cleaning aids business in 2017 under the “Kleeno” subbrand (under the “Cello” brand).
  • “Cello” brand is well established and enjoys strong brand recall. These brands include its flagship brand “Cello” and the “Unomax” brand, as well as the “Puro”, “Chef”, “H2O”, “Modustack”, “Kleeno”, “Maxfresh” and “Duro” sub- brands (under the “Cello” brand), and “Ultron2X” and “Geltron” sub-brands (under the “Unomax” brand).
  • Pan-India distribution network with a presence across multiple channels;
  • Ability to manufacture a diverse range of products and maintain optimal inventory levels;
  • A large portion of their revenue (79.37% of their total revenue) comes from their in-house manufacturing operations, aggregated to from operations for FY 2023. The remaining products (mostly steel and glassware products) are outsourced from third-party contract manufacturers. Sale of steel and glassware products supplied by third- party contract manufacturers accounts for Sale of steel and glassware products supplied by third- party contract manufacturers of the sales.
  • Exports account for 8% of revenues.
  • Online sales (including sales from e-commerce marketplaces and our own websites) accounts for 8% of sales.
  • Its new Rajasthan Glassware manufacturing Unit is currently under construction and is estimated to be completed in Financial Year 2025.
  • The private equity investors, India Advantage Fund S4 I and India Advantage S 5 I, have supported the Company through multiple business initiatives. Further in October 2022, Cello World raised Rs 475 crore from four alternative investment funds managed by ICICI Venture Funds and one by Tata Capital, by issuing compulsorily convertible preference shares.
  • These AIFs held 8.12% stake in the company. The equity shares to ICICI Ventures and Tata Capital, were issued at Rs. 276 per share (conversion of CCPs) which is a considerable discount to current IPO price.
  • Wim Plast Limited, which is into moulded furniture and is a separately listed 55% subsidiary of Company trades at a PE of 19.3x.
  • The OFS size has been increased from Rs.1,750 cr as per DRHP, filed on 14th Aug 2023 to Rs. 1,900 cr as per RHP.
  • Cello World IPO is coming at a PE ratio of 48x(fy23 earnings), 41.5x (FY24 annualized on Q1FY24 results).
  • I intend to apply in the Cello World IPO. The IPO is fully priced but is backed by capable promoters, a brand build over many decades, has high double-digit margins and expected 30% growth in revenues and profits for next few years guidance by management.
  • GMP as reported on social media has been around Rs. 120.

Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . Also Certified in some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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