Cello World – About the Company
Cello World is one of the leading consumer ware companies in India with a product portfolio in diverse categories like consumer houseware, kitchenware, moulded furniture and writing instruments and stationery with various allied product categories.
However, Cello World earns around 79% of its total revenue from its in-house manufacturing operations as of FY23. While, for most of the steel and glassware products, the company is relying on outsourcing to third-party contract manufacturers.
To meet the demand of its customers Cell World has installed an annual capacity of 57.77 million units of consumer houseware products per annum, 650.00 million units of writing instruments and stationery products per annum, 15,000 tonnes of opalware and glassware per annum and 12.80 million units of moulded furniture and allied products.
Cello World is offering a wide range of 15,841 stock-keeping units spanning its various product categories. All its products are manufactured at its 13 manufacturing facilities that are spread across the five locations - Baddi (Himachal Pradesh), Daman, Haridwar (Uttarakhand); Kolkata (West Bengal) and Chennai (Tamil Nadu) as of March 31, 2023.
Cello World IPO Objectives
Cello World comes with the public issue to raise the fund of around Rs. 1,900 crore. One of the objectives of bringing this IPO is to provide the opportunity for promoters and shareholders to reduce their stakes and earn a return through an offer for sale.
Another objective of this Cello World IPO is to achieve the benefits of listing the equity shares on the stock exchanges, with the motive to enhance its brand image and make its shares public ally available for trading in the stock market.
Cello World IPO Details:
|IPO Open Date||October 30, 2023|
|IPO Close Date||November 1, 2023|
|Listing Date||November 9, 2023|
|Face Value||Rs 5 per share|
|Price||Rs.617 to Rs.648 per share|
|Lot Size||23 Shares|
|Issue Size||Rs 1900 crore|
|Offer For Sale||Rs 1900 crore|
|Issue Type||Book Built Issue IPO|
|Listing At||BSE, NSE|
|QIB Shares Offered||Not more than 50% of the Offer|
|NII (HNI) Shares Offered||Not less than 15% of the Offer|
|Retail Shares Offered||Not less than 35% of the Offer|
Cello World IPO Issue Price & Size
The issue price of Cello World IPO has been declared by the company. The issue is of Rs. 1900 crore and the issue is totally offer for sale, meaning the promoters would be diluting their shareholding through the IPO.
The issue will see promoter Pradeep Ghisulal Rathod offload Rs. 300 crore worth of shares, Rs. 736 crore by Pankaj Ghisulal Rathod, Rs. 464 crore by Gaurav Pradeep Rathod, Rs. 200 crore by Sangeeta Pradeep Rathod, Rs. 100 crore by both Babita Pankaj Rathod and Ruchi Gaurav Rathod.
Cello World IPO Launch Date
The launch date of Cello World IPO has been declared by the company, the issue will open on October 30, 2023 and will close on November 1st, 2023.
Cello World Financial Statements:
|Particulars (Rs in Million)||FY23||FY22||FY21||CAGR|
|Revenue from Operations||17,966.95||13591.76||10494.55||30.84%|
|Depreciation & Amortization Exp.||503.26||475.54||489.01|
|Interest Expenses or Finance Cost||17.56||28.50||22.76|
|Net Profit Before Taxes||3851.96||2991.00||2356.93|
|Net Profit After Tax||2850.66||2195.23||1655.48||31.22%|
|Net Profit Margins||15.87%||16.15%||15.77%|
|Earnings Per Share Basic (Rs)||13.65||10.46||7.75|
|Earnings Per Share Diluted (Rs)||13.17||10.46||7.75||30.36%|
Cello World Financial Performance
The revenue from operations of the Cello World registered a CAGR of 30.84% from FY21 to FY23 at Rs. 1796.70 crore from 1049.45 crore in FY21. However, owing to the increase in operating expenses compared to revenue growth, the operating income of the company grew at a CAGR of 23.46% during the same period but the company has still maintained its EBITDA Margins.
The EBITDA stood at Rs 437.28 crore in FY23 from Rs 286.87 crore in FY21. Because of these higher operating expenses, the operating margins of the Cello World went slightly down standing at 24.34% in FY23 from 27.34% in FY21.
The Net Profit of the company stood at Rs 285.06 crore in FY23 which grew at a CAGR of 31% from Rs 165.55 crore in FY21. However, despite the rise in the depreciation and tax Liabilities Company has maintained its Net Profit margins at 15.87% which is slightly down from FY22 but almost the same from FY21. Owing to the better profit margins the earnings per share of the company has improved to Rs 13.65 from Rs 7.75 in FY21 giving the encouraging returns on the equity.
Cello World IPO Promoters & Shareholding of the Company
Gaurav Pradeep Rathod, Pankaj Ghisulal Rathod and Pradeep Ghisulal Rathod are the promoters of Cello World. At the time of filing the DRHP with SEBI, these top three key promoters are holding 28%, 18% and 14% stakes in the company.
While the other eight family members hold the remaining portion of shares in the company. However, owing to the conversion of preference shares issued to Advantage Fund S4& S5 I and Tata Capital Growth Fund II into equity shares the shareholdings of all the promoters are diluted by 7.66% reducing the stakes of all the shareholders accordingly.
Cello World IPO Shareholdings:
|S.No.||Name of the Shareholder||No. of Shares||% of pre-Offer Shareholding|
|1||Gaurav Pradeep Rathod||54,600,000||28|
|4||PankajRathod Family Trust||19,500,000||10|
|5||BabitaRathod Family Trust||19,500,000||10|
|6||Sangeeta Pradeep Rathod||15,600,000||8|
|7||Ruchi Gaurav Rathod||7,800,000||4|
|10||Karishma Pradeep Rathod||3,900,000||2|
Why Invest in Cello World IPO?
To invest in any company whether it is launching an IPO or already listed in the secondary market, you must analyse the various factors related to the company. Apart from valuation and its comparison with peer group companies you also need to analyse the strength of the company that will drive its revenue growth and earnings in the upcoming future.
At the same time also analyses the risk factors that can affect the business operations and other operational activities of the company. All these factors should be considered while investing in the IPO, so let’s find out what are these factors.
- With the growth of the economy and per capita income the disposable income of the people also increasing across the country. Furthermore, with the increase in the nuclearisation of families and growing demand for organized functional kitchen space, the demand for such consumerware products also increasing which will also help the Cello World to increase its sales in coming years.
- As per the reports, the Indian consumerware market was valued at Rs 34,800 crore in FY 2022. The market grew at a CAGR of 6.9% in FY20-22 and is further expected to grow at a CAGR of 10.2% and reach at Rs 56,000 crore in FY27. This industry growth in the consumerware market will also provide an opportunity for Cello World to increase its market share.
- In the past years, the company has acquired the listed company Wim Plast Limited with a 55% stake in the company. This acquisition helped the various other entities of Cell World to increase its market presence in plastic moulded, extruded articles and various other plastic-made items.
- Its existing manufacturing units are capable of producing a wide array of products independently. In FY21, FY22 and FY23, it has launched 397, 169 and 380 new products across its three product categories, respectively, that will help to boost the sales.
- The company has a strong distribution network spread across the different regions of the country. As of March 31, 2023, its distribution network is supported by 683 sales team members, 678 distributors and around 51,900 retailers for the distribution and selling the consumer houseware products.
- Whine on the other hand, for Writing Instruments and Stationery, is operating with 29 super-stockists, around 1,450 distributors, and 59,100 retailers. However, in the Moulded Furniture and Allied Products category, it is distributing its products with the help of 1,067 distributors and around 6,500 retailers are located across different parts of the country.
- At the financial end of the past three years company has shown significant growth in revenue and net profit with CAGR growth of around 3% in both sales and net earnings.
- Cell World has also enjoyed one of the highest EBITDA margins in the industry in the last three years. It also has the highest ROCE amongst its peers in FY21 and FY23.
- The company is acquiring the raw materials purchase-order basis and doesn't have any long-term contract with the suppliers, which can be a concerning factor for the company especially when the price of raw materials price fluctuates and can increase the operating expenses of the company.
- The major portion of revenue of the company comes from their network of distributors and maintaining good relations with the distributors is another challenging factor for the company. And the revenue of the company constitutes only around 15% of their sales.
- The Company relies on third-party contract manufacturers for some of its products that are subject to risks, particularly for the continuity of supply of products that can affect its business operations resulting the financial condition and cash flows will be also affected.
- The various products of the company are sold with other brand name like "Unomax”, “Kleeno”, “Puro" and the respective logos. One of its competitors also uses the "Cello" brand name for its writing instruments business. These brand-related factors put the company, at risk of copying and selling the products in the same brand name.
Cello World IPO Grey Market Premium
The Grey Market Premium or GMP of Cello World IPOis not known as the issue price is not declared by the company. GMP is the price of IPO pre-listing in the grey market that represents how much price the Cello World’s shares are expected to list on the exchange.
The GMP can fluctuate increase or decrease as per the demand and supply of shares in the primary market. Though the GMP is not a reliable criterion to quote the share price of any company it gives an indication of market sentiment towards the stock.
Cello World IPO Review & Analysis
Overall Cello World is one the well-known brands in consumer houseware, kitchenware and moulded plastics made household items. The revenue growth and margins of the company are encouraging making the IPO considerable for application but only when the issue price is launched at a discounted price or issued at a low price compared to its competitors.
As the issue price is not known, the valuation of stock is not possible but if the Cello World IPO is available at a fair price or lower than its listed rivals, then you can apply with motive to earn profits from the listing gains. If the Cello World IPO is issued at a very high premium price you can avoid applying and if it is fairly priced, you can consider investing in the IPO with the long-term investment perspective as the company is expected to grow in future.
How to Apply for Cello World IPO?
To buy or sell the shares of any company and hold the same in your name you need a trading account and ademat account respectively. If you have both accounts, you can easily apply through your broker's website. However, if you don't have these accounts, you can apply here at Moneysukh to open demat account and trading account with the required documents. And when your account is opened and KYC is verified you can follow the steps given below.
Steps to Apply for Cello World IPO:
Step 1: As soon as Cello World IPO opens you can apply online.
Step 2: Just open trade.moneysukh.com in your browser and log in with your User ID & password.
Step 3:Now you have to find the IPO section and select the Cello World IPO.
Step 4:Here simply fill in all the required details like price, quantity, and so on.
Note:At the time of applying for an IPO, always bid at the cutoff price before submitting your application.
Step 5:Now just make the payment as per the lot size and submit your IPO application successfully.
How to Check Cello World IPO Allotment Status?
The IPO allotment procedure is started once the IPO bidding process is completed. Earlier it was taking 5 to 7 days for allotment but now as per the SEBI guidelines the allotment and listing procedure is becoming faster. Now after bidding the allotment is done within 3 days and listing within five days. And if they don’t get the allotment of shares in any IPO making the funds of investors available for use to apply in other IPOs or invest in any other asset.
When an IPO is oversubscribed in a particular category like retail your chances of allotment in minimised. Here you can apply in the HNI category, and you can increase chances of getting allotment in the IPO, as the minimum amount to apply is much higher.
If you have been allotted any share it will be transferred into your demat account that you sell on the day of listing and if you don’t get the allotment your IPO application money will be refunded into your bank account or the amount will be unblocked if applied through ASBA. You can use online websites to check Cello World IPO allotment status.