Cello World IPO Review: Cello World is coming up with the IPO which is set to be listed on the NSE and BSE. The IPO will be open for subscription on 30th October 2023 and closes on 1st November 2023. This article about Cello World IPO Review, includes an in-depth analysis of the company’s financials and the strengths and weaknesses of Cello World. Keep reading for more details!
Table of Contents
Cello World IPO – About The Company
Cello World Limited, a leading player in India’s consumer ware market, was incorporated in 2018. The company operates in three product categories: consumer houseware, writing instruments and stationery, and moulded furniture and allied products. It has established a strong presence with 13 manufacturing facilities spread across five locations in India.
As of June 30, 2023, Cello World Limited offered a diverse range of 15,891 stock-keeping units under various brand names such as Cello, Unomax, and Wimp.
The consumer houseware segment is the company’s main revenue generator, accounting for 65.74% of the total revenue. This is followed by the moulded furniture and allied products segment contributing 18.40%, and the writing instruments and stationery segment making up 15.86% of the company’s revenue.
Cello World IPO Review – Industry Overview
India’s consumerware market has been growing steadily due to organized retail and e-commerce. It went from ₹305 billion in FY 2020 to ₹348 billion in FY 2022, with a 6.9% CAGR. India is the fifth largest and preferred retail destination globally, with fast development in urban and rural areas. Organized retail penetration is expected to reach ~20% by FY 2025.
The global consumerware market is dominated by branded players, who have ~60% of the market share and grew at a ~6-7% CAGR from CY 2015 to CY 2022.
The rest of the market is unbranded. India’s consumer houseware market offers various products, with small kitchen appliances being the largest segment with 39% of the total sales in FY 2022. Cookware was the second largest segment with 24%, followed by hydration products with 16%.
The other categories, such as lunchboxes, melamine, storage containers, insulated ware, and cleaning products, accounted for the remaining 22% of the market.
The Indian stationery market has shown consistent growth over the years, reaching an estimated size of INR 385 Bn by value and expected to grow at a ~14% CAGR during FY 2023-27 period to reach a market value of INR 657 Bn by FY 2027.
The Indian glassware market was worth ₹31 billion in FY 2022 and is projected to grow at a 10% CAGR from FY 2020 to FY 2022, and at a rate of 12.1% in 2023. By FY 2027, the market is expected to reach ₹75 billion.
The Indian houseware market was worth ₹318 billion in FY 2022 and grew at a 6.6% CAGR. The market is expected to grow at a rate of 10% in 2023 and reach ₹343 billion. By FY 2027, the market is expected to reach ₹600 billion. The key drivers of growth are advanced and affordable materials, modular kitchens and aesthetic consumer ware, higher income level and social media influence.
Cello World IPO – Financial Highlights
Cello World’s IPO underscores its strong financial trajectory. The company’s operational revenue witnessed a significant jump, escalating from ₹1049.4 crore in March 2021 to ₹1,796.6 crore in March 2023.
Concurrently, the Profit After Tax (PAT) experienced growth, increasing from ₹165 crore to ₹285 crore. The net worth of the company nearly doubled within two years, rising from ₹289 crore in 2021 to ₹665 crore in 2023.
The latest quarter reported a revenue of ₹471 crore and a profit of ₹82 crore. Despite the growth, the company’s borrowing remained stable at around ₹334-335 Cr between 2021 and 2023.
Cello World showcases impressive capital efficiency with a robust Return on Equity (ROE) of 134.43% and a Return on Capital Employed (ROCE) of 44.48%, indicating effective utilization of capital resources.
Financial Metrics
(Source: RHP of the company)
Competitors of the company
Cello World operates in a competitive landscape that includes several prominent companies such as Borosil Limited, Kokuyo Camlin Limited, La Opala RG Limited, Stove Kraft Limited, TTK Prestige Limited, Linc Limited, and Hawkins Cookers Limited.
Strengths of the company
- Strong Market Position: 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.
- In-house Manufacturing: The company’s 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.
- Robust Distribution Network: Cello World boasts a strong distribution network with 721 sales members and over 60,000 retailers across India. Its effective marketing strategies, including in-shop displays, merchandising, print and social media advertisements, retail branding, and product branding, have helped in developing a strong brand identity.
- Diversified Product Portfolio: As of 2023, the company 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.
Weaknesses of the company
- Dependence on Distribution Network: The company 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.
- Reliance on Third-Party Suppliers: 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.
- Demand Forecasting and Inventory Management: 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.
- Innovation Risks: 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.
Cello World IPO Review – GMP
As of October 26th 2023, The IPO for Cello World is set at a price band of ₹617-₹648 per share. The latest grey market price stands at ₹87. The IPO is projected to listed at a premium of 13.43%, with an estimated listing price of ₹735.
Key IPO Information
| PARTICULARS | DETAILS |
|---|---|
| IPO Size | 1900 Cr |
| Offer for sale | 1900 Cr |
| opening date | 30th october 2023 |
| closing date | 1st November 2023 |
| face value | ₹5 per share |
| price band | ₹617 to ₹648 per share |
| lot size | 23 shares |
| Minimum lot | 1 (23 shares) |
| maximum lot | 13 (299 shares) |
| Investment amount | ₹14,904 |
| listing date | 9th November 2023 |
Promoters: Pradeep Ghisulal Rathod, Pankaj Ghisulal Rathod and Gaurav Pradeep Rathod are the promoters of the company.
Book Running Lead Manager: Kotak Mahindra capital company limited, ICIC securities limited, Lifl Securities limited, Jm financial limited, Motilal Oswal investment advisors limited.
Registrar to the Offer: Link Intime India Private Limited
The Objective of the Issue:
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.
In Closing
Cello World holds a strong market position in India’s consumerware market with its diverse product categories, material types, and price points. Its multi-channel distribution network enables it to serve as a “one-stop-shop” for consumers across all income levels.
The company is also planning to expand its business by setting up a glass manufacturing unit in Rajasthan, equipped with European machinery for efficient productivity and enhanced manufacturing capacity. This expansion, along with its ongoing efforts to broaden its product portfolio, underscores Cello World’s commitment to growth and innovation.
What do think the future holds for the company? Are you applying for the IPO? Let us know in the comments below.
Written By Niharika Jadhav
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