Consumer products player Cello World is aiming to launch its IPO next week. It aims to mobilize INR 1,900 crores by way of an Offer For Sale (OFS) by existing investors. Here are the top things to know about Cello World IPO.
#1 Cello World IPO: Business Overview
Incorporated in 2018, Cello World is a popular Indian consumer products company. The consumer ware market is broadly divided into two categories, consumer houseware and consumer glassware. Cello is a leading company with a presence in consumer houseware, writing instruments and stationery, molded furniture and allied products categories, and consumer glassware categories.
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Cello World has a great track record of scaling up new businesses and product categories. Cello launched its glassware and opalware business in 2017 under the ‘Cello’ brand, also launched the writing instruments and stationery product category in 2019 under the ‘Unomax’ brand, and started its cleaning aids business in 2017 under the ‘Kleeno’ sub-brand (under the ‘Cello’ brand).
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#2 Cello World IPO: Offer Details
The Cello World IPO is scheduled for 30 October to 1 November 2023, with a price range of INR 617 to 648 per share. The IPO is purely an OFS of 29,320,987 shares, valuing the offering between INR 1,809.10 – 1,900 crores. It is worth highlighting that the company will not get any funds from IPO proceeds as it is a sale of shares by existing investors. The minimum bid size is 23 shares, priced at INR 14,904, and retail investors are allotted 35% of the shares. The IPO will be listed on both BSE and NSE.
#3 Cello World: Private Equity Onboard
Cello World is largely a family-owned enterprise with nearly 92% equity residing with promoters and promoter group. The company onboarded external investors in October 2022 in the form of preference shares.
As on the date of RHP, 5.7% of the company was with two schemes of India Advantage Fund which is an alternative investment fund managed by ICICI Venture Funds Management Company Limited. Another 2% equity in the company is with Tata Capital Growth Fund. None of these external investors is selling its shareholding in the IPO.
#4 Cello World IPO: Manufacturing Infrastructure
The company operates 13 manufacturing facilities across five locations in India, including eight facilities in Daman in the Union Territory of Daman and Diu; two facilities in Haridwar, Uttarakhand; one facility in Baddi, Himachal Pradesh; one facility in Chennai, Tamil Nadu; and one facility in Kolkata, West Bengal.
These manufacturing capabilities allow it to manufacture a diverse range of products in-house. The revenue derived from its in-house manufacturing operations aggregated to 78.65%, 82.63%, 79.37%, 82.08%, and 79.67% of the total revenue from operations for the Financial Years 2021, 2022, and 2023 and the three months ended 30 June 2022, and 30 June 2023, respectively. As of 30 June 2023, Cello World offered 15,891 stock-keeping units (SKUs) across its product categories.
The 13 manufacturing facilities have an installed annual capacity of 57.77 million units of consumer houseware products per annum, 15,000 tonnes of opalware and glassware per annum, 705.00 million units of writing instruments and stationery products per annum and 12.80 million units of moulded furniture and allied products.
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#5 Cello World IPO: Capacity Expansion
Despite its vast manufacturing setup, the company continues to undertake capacity expansion. As of 30 June 2023, Cello World was establishing a glassware manufacturing facility in Rajasthan which is expected to have an installed capacity of 20,000 tonnes of glassware per annum. Once operational, this will double the company’s output capacity of glassware.
Similarly, the company has completed the expansion of opalware capacity in its manufacturing facility in Daman Unit-VI to increase its installed annual capacity to 25,000 tonnes of opalware per annum, from 15,000 tonnes of opalware per annum, as of 6 August 2023.
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#6 Cello World IPO: Distribution Network Across Multiple Channels
Cello World has a strong pan-India distribution network, developed carefully over the last six decades. The nationwide sales and distribution network is supported by its 721-member sales team, as of 30 June 2023.
The table below sets forth details relating to its nationwide sales and distribution network across three product categories:
The products also reach consumers through modern trade and export channels, e-commerce marketplaces, and its websites. The company has an established export channel for the stationery business. In addition, it also sells the products in bulk quantities to corporate clients and government departments.
#7 Cello World IPO: Sales and Marketing
As of 30 June 2023, Cello World employed approximately 770 sales and marketing employees. The sales and marketing employees function as the link between distributors and retailers, by marketing its products and collecting orders which are then communicated to the relevant distributors, and all its marketing efforts are initiated and coordinated by the marketing team of 24 employees.
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#8 Cello World IPO: Research, Development and Design
The research, development, and design efforts are enabled by its employees qualified in mechanical engineering, designing packing materials, operating moulds, tool and die making, and skilled in technical upgrading of machinery, computer-aided design, and other software-designing applications.
All new products are designed and developed by its in-house design team of 25 members, as of 30 June 2023, which is responsible for designing products that cater to the evolving consumer trends and needs in India. During the Financial Years 2021, 2022, and 2023, and 30 June 2023, Cello World launched 397, 169, 380, and 50 new products, respectively.
#9 Cello World IPO: Financial Performance and Valuations
The company has demonstrated strong growth in topline and bottomline in the recent years. Its revenue CAGR growth (calculated as the growth of revenue from operations from FY21 to FY23) stood at 30.84% between FY 2021 and FY 2023. During the same period, its net income jumped from INR 165.55 crore to INR285.06 crore. This was aided by strong and consistent margins.
| FY 2021 | FY 2022 | FY 2023 | Q1 FY 2024 | |
| Revenue | 1,049.46 | 1,359.18 | 1,796.70 | 471.78 |
| Expenses | 823.89 | 1,076.01 | 1,428.24 | 364.96 |
| Net income | 165.55 | 219.52 | 285.06 | 82.83 |
| Margin (%) | 15.77 | 16.15 | 15.87 | 17.56 |
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| FY 2021 | FY 2022 | FY 2023 | |
| EPS | 7.75 | 10.46 | 13.17 |
| PE ratio | – | – | 46.85 – 49.20 |
| RONW (%) | 52.21 | 45.94 | 23.17 |
| NAV | – | – | 56.84 |
| ROCE (%) | 58.73 | 40.92 | 44.48 |
| EBITDA (%) | 27.34 | 25.71 | 24.34 |
| Debt/Equity | 5.11 | 1.70 | 0.57 |
#10 Cello World IPO: Grey Market Whispers
At the time of writing this article, Cello World IPO GMP stood at nearly INR 100 per share, which translates to expected listing price of INR 750 per share. This indicates that successful allotees in Cello World IPO can expect to register nearly 16% gains.
