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Cello World Limited IPO: Check Issue Size, Date and Price Band

30 Oct 2023

Introduction:

2023 was a fierce year for Indian IPO investors. It witnessed the launch of over 100 mainboard IPOs, raising more than Rs. 27,000 crores by the end of October 2023. As we move into the penultimate month of the year, the euphoria around the primary market refuses to die down, with several more companies awaiting to launch their Initial Public Offerings (IPOs).

Cello World Limited is first in the line, planning to raise Rs. 1,900 crores through its IPO that opens for public subscription on Monday, 30 October 2023. Continue reading to know more details of this IPO, including price band, lot size, etc., and subsequently, decide if you should invest in it or not.

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About Cello World Limited

Incorporated in 2018, Cello World Limited is a leading Indian consumer houseware company. It manufactures and sells products in three categories – consumer houseware, stationery, and moulded plastic furniture under the brand names “Cello” and “Unomax”. Some of the popular products of the company include dinnerware, drinkware, cookware, casseroles, kitchen appliances, cleaning supplies, notebooks, pens, chairs, and plastic tables.  

As of 30 June 2023, the company had 13 manufacturing facilities across five locations in India. Its sales and distribution network comprises 721 sales team members, 717 distributors, 58,716 retailers, and 15,891 stock-keeping units (SKUs) across all product categories. 

Key Strengths of the Company

Below are the key strengths of Cello World Limited as highlighted in its Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI):

  • “Cello” is one of the most recognised brand names in India with strong market positions
  • The company has a diversified product portfolio to cater to a vast consumer base
  • Boasts an excellent track record of business expansion through new product launches
  • Has a robust pan-India distribution network comprising multiple channels
  • Significant production capacity across 13 manufacturing facilities in India
  • More than six decades of experience in the industry
  • Highly skilled promoters and management team with an excellent track record
  • Revenues have grown considerably in FY23 at a CAGR OF 31.22%

Key Risks or Weaknesses Highlighted

Key risks or weaknesses associated with Cello World Limited include:

  • Absence of long-term contracts with raw material suppliers
  • Volatility in raw material prices may impact the cash flow and profit margin
  • Any disruption in the distribution network can lead to adverse effects
  • Third-party manufacturers manufacture some of the products
  • They do not own trademarks for their brands and respective logos
  • Operates in a highly competitive market
  • Promoters may have a significant influence over business decisions
  • The seasonal nature of the business may result in working capital fluctuations

Key Financials of the Company

The financials of a company play a crucial role in influencing investors to invest in its IPO. Below are the key financials of Cello World Limited for the last three financial years as per the RHP:

Particulars Three-month Period Ended June 30, 2023 As of and for
FY Ended 2023 FY Ended 2022 FY Ended 2021
Revenue From Operations 4,717.79 17,966.95 13,591.76 10,494.55
Gross Profit 2,481.22 9,011.81 6,806.24 5,280.32
Gross Profit Margin (in %) 52.59 50.16 50.08 50.31
EBITDA 1,273.02 4,372.78 3,495.04 2,868.70
EBITDA Margin (in %) 26.98 24.34 25.71 27.34
EBIT 1.154.86 3,869.52 3,019.50 2,379.69
EBIT Margin (in %) 24.48 21.54 22.22 22.68
Return on Capital Employed (in %) 8.06 44.48 40.92 58.73

*Amount in Rs. millions except percentages

As you can see, the company’s revenue and profit growth have remained stable over the last three financial years. The gross profit margin and ROCE are highly impressive at 50.16% and 44.48% respectively. The EBITDA margin, however, has declined from 25.71% to 24.34% in the latest financial year.

Details of the IPO

The Cello World Ltd. IPO opens for public subscription on Monday, 30 October 2023 and closes on Wednesday, 1 November 2023. It will be entirely an offer for sale of 293.32 lakh equity shares with no fresh issue component. The price band has been fixed in the range of Rs. 617 to Rs. 648 per share.

Refer to the table below for more IPO details:

IPO Date 30 October to 2 November 2023
Basis of Allotment 06-Nov-23
Listing Date 09-Nov-23
Face Value Re. 5 per share
Price Band Rs. 617 to Rs. 648
Lot Size 23 shares
Total Issue Size 29,320,987 equity shares (aggregating up to Rs. 1,900 crores)
Offer For Sale 29,320,987 equity shares (aggregating up to Rs. 1,900 crores)
Listing At NSE, BSE

The bottom line

The company has demonstrated strong financial growth in the last three years. Based on the issuing company’s financials and valuations, it makes sense to invest in Cello World Ltd. IPO. However, you must analyse the market conditions and several other factors carefully before investing. With Motilal Oswal, you can open a free Demat account and invest in stocks and IPOs seamlessly.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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