Cello World IPO Review – Should you Invest or Avoid?

Cello World’s IPO will begin offering on October 30, 2023. Cello World is a famous Indian consumer products company. The company has generated solid revenue and margin growth. Should you invest in Cello World IPO? This article provides Cello World Limited IPO review, IPO details, risk factors, and positive aspects to help investors who are considering investing.

Cello World IPO dates and key details

About Cello World Limited

The company is one of the well-known consumer products companies in India with 60 years of experience in this field, primarily dealing in three categories:

i) writing utensils and stationery;

ii) molded furniture;

iii) Consumer household products and related products.

Cello World has 13 manufacturing units in India. The company also aims to set up a glass manufacturing unit in Rajasthan with European-made machinery to enable efficient productivity and increased manufacturing capacity.

• As of March 31, 2023, the Company had 15,841 stock-keeping units (“SKUs”) across its entire product range.
• As of March 31, 2023, the Company’s national sales and distribution team consisted of 683 members.

Cello World Limited – Core Strengths

• Established brand name and strong market position
• Diverse product portfolio across price ranges to meet diverse consumer demands
• Achievements in scaling up new businesses and product categories
• Pan-India distribution network across multiple channels
• Ability to manufacture diverse products and maintain optimal inventory levels
• Skilled and experienced management team
• Strong past financial performance

Cello World Limited – Financial Insights

Target of IPO

The IPO size of the IPO is Rs 1,900 crore, which is the entire OFS (Offer for Sale). Under OFS, that money is used to sell shareholders and the company gets nothing.

Positive factors of Cello World IPO

• Cello world has established its brand name and strong market position with a diversified product portfolio across price ranges that caters to the diverse demands of consumers.
• Has a track record of scaling up new businesses and product categories
• The company has a pan-India distribution network with presence across multiple channels
• Companies with good performance in the past

Negative or risk factors in this IPO

• The only IPO stock is OFS. Under OFS, the funds would be sold to shareholders and the company would not make a profit.
• Fluctuations in raw material prices, particularly the prices of plastic granules and plastic polymers, and disruptions in their availability could adversely affect the Company’s business.
• The Company relies on distribution networks in India and abroad for the sale and distribution of its products, and any disruption to such distribution networks could have an adverse effect on its business.
• Our dependence on third-party contract manufacturers for some of our products exposes us to risks that, if realized, could adversely affect our business, results of operations, financial condition and cash flows. may give.

We do not own the trademarks of our major brands, including “Cello”, “Unomax”, “Kleeno”, “Puro” and their respective logos. The company’s business could be adversely affected if it is unable to renew related agreements granting permission to use these trademarks and logos. In addition, the “Cello” brand name is also used by a competitor’s writing instruments business. If the Cello brand name is adversely affected by the actions of competitors using the brand name, our reputation and business may be adversely affected.

#6 – Investors should read both the internal and external risk factors presented in the RHP.

Cello World IPO Price Evaluation

• The IPO price range is between Rs 617 and Rs 648 per share.
• Considering last year’s FY2023 EPS was 13.17 rupees, the P/E ratio is 49 times.
• Considering the last three years’ weighted EPS of Rs 11.36, the P/E ratio is 57x.
• Listed peers such as KOKUYO Camlin have a P/E ratio of 58 times (highest), Linc Limited’s P/E ratio is 33 times (lowest), and the industry average P/E ratio is 45 times. Therefore, the IPO price range of 49x to 57x P/E is fully priced.

Cello World IPO GMP (Gray Market Premium)

Although the accuracy of GMP cannot be predicted, the current GMP is between Rs 110 and Rs 120. GMP is nothing but the premium at which these stocks are traded in the offline market.

Cello World IPO timetable

Cello World IPO Review – To Buy or Not to Buy?

After reading the pros and cons, you may be wondering whether you should apply for this IPO or not.

This IPO has several positive aspects, including an established brand name, strong market position, diversified product portfolio, and track record of scaling up new businesses. These strengths are supported by our pan-India distribution network and strong past financial performance.

However, there are some risks and downsides to consider. The biggest concern is that the IPO is an offer for sale (OFS). This means that the funds raised will go to the selling shareholder rather than the company. Additionally, the company is exposed to fluctuations in raw material prices, dependence on distribution networks and dependence on third-party contract manufacturers. There are also trademark-related risks.

Considering these factors, the decision to invest in Cello World IPO should be carefully considered. If you are happy with the fact that the IPO is an OFS and believe in the company’s ability to manage the risks involved, it may be a good investment opportunity.

High risk investors can invest in this IPO.

Investors can also view all internal and external risk factors and company details at: Cello World IPO RHP.

Suresh KP is the founder of Myinvestmentideas. He is a NISM Certified Investment Advisor and he is a NISM Certified Research Analyst. He has been analyzing financial markets for the past 20 years. He can be reached at suresh@myinvestmentideas.com.

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