Initiating Coverage

INDIA l Institutional Research l Consumer l 6 March 2024

Cello World l BUY l CMP: 812 | TP: 1100

Might of an elephant, sprint of a deer

We initiate coverage on Cello World, with a TP of Rs.1100, an upside of ~36%. Cello Target Price 1100 Key Data
has rapidly ascended to one of the nation's most iconic consumer brands, renowned Bloomberg Code CELLO:IN
for its strong brand recall. Its expansive product portfolio, comprising CMP* 812 Curr Shares O/S (mn) 212.2
consumerware, writing instruments, moulded furniture, and allied products, has Diluted Shares O/S(mn) 212.2
entrenched its presence in households. The brand's dominance is underpinned by Upside 36% Mkt Cap (Rsbn/USDmn) 172.8/20.2
judicious management decisions, strategic expansion, and a product line tailored to Price Performance (%) 52 Wk H / L (Rs) 949,749
diverse consumer needs. Noteworthy is the company's commitment to in-house 1M 3M 6M 3M Average Vol. 2,83,82,875
manufacturing, mitigating supply issues, and a diverse product basket that insulates Cello -3.4 3.0 2.8
it from industry fluctuations. Hence its premium valuation is justified and can Nifty 2.7 7.2 15.2
sustain owing to brand power, an extensive product portfolio, and the management Source: Bloomberg, ACE Equity, MNCL Research,
team’s acumen in navigating the market landscape.
Shareholding pattern (%)

▪ One-stop shop solution: - Cello, a leader in the Indian Consumerware market, Dec-23

excels in consumer houseware, writing instruments, stationery, and moulded Promoter 78.06
furniture. Its diverse portfolio ensures consistent revenue growth and a DIIs 12.75
distinctive "one-stop-shop" appeal across various categories and income levels. FIIs 3.02
Offering an impressive range of over ~15,500 SKUs, Cello demonstrates agility in
Others 6.17
product expansion. Positioned strategically, it taps into a substantial total
Source: BSE
addressable market (TAM) of ~ Rs 700bn, spanning its core verticals -
Consumerware, writing instruments, and moulded furniture and allied products. Why should you read this report?
▪ Impressive track-record and clear growth path - Management’s prowess in new • Understand the growth drivers for the consumer business
business expansion is evident from the swift growth of opalware, writing • How it stands vis-à-vis peers
instruments, and cleaning aids, from a modest to formidable market presence • Margin drivers for the company
within a short time. For example, in just three years, opalware surged at a
remarkable 36.4% CAGR (FY21-23), and its Unomax writing instruments, initiated Distribution reach
in 2019, delivered a stellar 60% revenue CAGR. Cello's strategic focus
encompasses distribution expansion, capacity enhancement, operational 80000
efficiency through improved utilization, and aggressive marketing campaigns. 60000
Moreover, with a commitment to innovation, the company launched an
impressive ~940 new products each year from FY21 to FY23. 40000

▪ Leading the charge in a thriving industry- In the booming Rs 377bn Indian 20000
consumerware industry, branded players' share is rising, reaching 61% in FY23 0
and projected to hit 67% by FY27. Cello, a credible player in the industry that is Cello La Opala Borosil
oligopolistic in the organized sector, is strategically well-positioned to capitalize
on this trend, backed by strong brand recall. With all segments set to grow at a
10%+ CAGR over FY23-27, industry consolidation provides a growth opportunity
for Cello, currently holding less than 3% market share in Consumer Houseware.
▪ Valuation & Risks- We expect a revenue growth of a 17% CAGR over FY23-FY26E
driven by the consumer glassware and consumer houseware division, supported
Rahul Dani
ably by the writing instruments division. EBITDA margins are likely to expand by Rahul.dani@mnclgroup.com
more than 200bps over the same period on the back of in-house manufacturing NISM-201500034725
of glassware products. We expect the company to post EBITDA CAGR of 20% and
PAT is likely to grow at 22% over FY23-FY26E. At CMP 812, stock is trading at 36.2x Vaidik Bafna
FY25E and 30.3x FY26E. We value the stock at 40x FY26E EPS of 27 and arrive at vaidik.bafna@mnclgroup.com
a target price of 1100, an upside of 36%. NISM-202100035711

Y/E Mar (Rs mn) Revenue YoY (%) EBITDA EBITDA (%) Adj PAT YoY (%) Adj EPS RoE (%) RoCE (%) P/E (x) EV/EBITDA (x)
FY21 10,495 2,767 26.4% 1,655 NM NM NM NM 0.8
FY22 13,592 29.5% 3,336 24.5% 2,195 32.6% NM NM 54.7% NM 10.5
FY23E 17,967 32.2% 4,205 23.4% 2,851 29.9% 14.6 84.7% 44.9% 55.4 8.0
FY24E 20,991 16.8% 5,199 24.8% 3,645 27.9% 18.7 51.3% 32.8% 43.4 33.4
FY25E 24,660 17.5% 6,192 25.1% 4,373 20.0% 22.4 35.2% 26.4% 36.2 27.7
FY26E 28,745 16.6% 7,319 25.5% 5,228 19.5% 26.8 32.8% 26.1% 30.3 23.1
Source: Company, MNCL Research estimates, Consolidated Financials.

MNCL Research is also available on Bloomberg. In the interest of timeliness, this document is not edited
Initiating Coverage
 Index
Investment Thesis in Charts ................................................................................................................. 3
Cello World – One stop shop solution.................................................................................................. 4
Impressive track-record and clear growth path ................................................................................... 6
Segmental performance – Consumerware division to outperform other divisions .............................. 9
Branded players gaining market share in the consumerware industry ............................................. 18
About The Company .......................................................................................................................... 19
Valuation – Household brand, spreading its wings prudently ........................................................... 21
Financials (Consolidated) ................................................................................................................... 27

Cello Limited 2
initiating Coverage
 Investment Thesis in Charts

Exhibit 1: Product Range Exhibit 2: Revenue Break-up (FY23)

20.6%

79.4%

In-house manufacutirng Out-sourced

Source: Company, MNCL research estimates Source: Company, MNCL research estimates

Exhibit 3: Revenue Break up (product wise) Exhibit 4: Going Ahead…

100% 100%
90% 18% 90% 18% 18% 17% 16%
26% 23% 26% 23%
80% 80%
16% 16% 17% 16% 16%
70% 11% 12% 70% 11% 12%
60% 60%
50% 50%
40% 40%
64% 64% 66% 64% 64% 66% 65% 67% 68%
30% 30%
20% 20%
10% 10%
0% 0%
FY21 FY22 FY23 FY21 FY22 FY23 FY24E FY25E FY26E

Consumerware Writing instruments Moulded furniture Consumerware Writing instruments Moulded furniture

Source: Company, MNCL Research Estimate Source: Company, MNCL Research Estimates

Exhibit 5: Total Revenue Growth (Rs mn) Exhibit 6: EBITDA (Rs mn) and OPM
35,000 8,000 7,319 27.0%
28,745 7,000 26.5%
30,000 6,192 26.0%
24,660 6,000
25,000 5,199 25.5%
20,991 25.0%
5,000 4,205
20,000 17,967 24.5%
4,000 3,336
13,592 2,767 24.0%
15,000
10,495 3,000 23.5%
10,000 2,000 23.0%
22.5%
5,000 1,000 22.0%
- - 21.5%
FY21 FY22 FY23 FY24E FY25E FY26E FY21 FY22 FY23 FY24E FY25E FY26E

Revenue EBITDA OPM

Source: Company, MNCL Research Estimate Source: Company, MNCL Research Estimate

Cello Limited 3
Initating Coverage
 Cello World – One stop shop solution
Amongst the most popular consumer products companies in
India
Cello, a stalwart in the Consumer Products segment, traces its roots back to 1962 when it was founded
by the visionary Late Mr. Ghisulal Dhanraj Rathod. Currently led by the incumbent promoter family, Mr.
Pradeep Ghisulal Rathod and Mr. Pankaj Ghisulal Rathod, the brand underwent consolidation in 2018
under Cello World, emerging as the parent company for various group entities directly controlled by the
The brand “Cello” was promoters.
also awarded one of
the most trusted The brand's enduring strength in the market is underpinned by its rich history, relentless product
brands of India in 2021 development, and a profound understanding of consumer preferences. Recognized as one of the most
by Commerzify
trusted brands in India in 2021 by Commerzify, Cello operates through established brands, "Cello" and
"Unomax," with an array of sub-brands such as Puro, Chef, H2O, Modustack, Kleeno, Maxfresh, and Duro
in consumer houseware, and Ultron2X and Geltron in writing instruments.

Cello's commitment to meeting dynamic consumer needs is reflected in its continuous innovation,
evident in recent launches encompassing writing instruments, cleaning aids, opalware, glassware,
cookware products, and appliances. With an expansive product range boasting approximately ~16,000
SKUs across various categories, Cello stands as a testament to enduring excellence and adaptability in
the ever-evolving market landscape.

Exhibit 7: Product categories

Product categories Brands Range of products offered
Houseware products, insulatedware, electrical appliances and cookware, cleaning aids,
Consumerware Cello
Opalware, Glassware, and Porcelain
Writing instruments and Ball point pens, Gell pens, metal pens, mechanical pencils, highlighters, fountain pens,
Unomax stationery
stationery correction pens
Moulded furniture and allied plastic chairs, tables, trolleys, stools, cabinets, ladders, moulds, bubble guards, crates,
Cello
products palletes, dustbin and storage items
Source: Company

Exhibit 8: Diversified portfolio

Source: Company

Exhibit 9: Regular introduction of new products

Product categories FY21 FY22 FY23
Consumer houseware 376 123 322
Writing instruments & stationery 18 34 47
Moulded furniture & allied products 3 12 11
Total new products launched 397 169 380
Source: Company

Cello Limited 4
Initating Coverage
Exhibit 10: Overall revenues Exhibit 11: Revenue contribution
120.0%
20,000 17,967
18,000 100.0%
25.6% 23.5% 18.4%
16,000 13,592 80.0%
14,000 10.6% 12.5% 15.9%
12,000 10,495 60.0%
Rs.mn

10,000
8,000 40.0%
63.8% 64.1% 65.7%
6,000 20.0%
4,000
2,000 0.0%
- FY21 FY22 FY23
FY21 FY22 FY23 Consumerware Writing instruments Moulded furniture

Source: MNCL Research, Company Source: MNCL Research, Company

Despite Covid pandemic,
revenue increased from
Rs.10.5bn in FY21 to
Rs.13.6bn in FY22 and
Rs.17.9bn in FY23.
The company's strategic acumen is evident in its adept handling of SKUs and product expansion, catering
to diverse consumer segments by offering products at various price points. In certain product categories,
the company initiated with more budget-friendly options and subsequently diversified into value-added
products at higher price points. Conversely, in other categories, it started with premium value-added
products and later expanded its range to include more affordable options.
This dynamic approach has led to a well-diversified product portfolio, a key factor in maintaining stable
profit margins over the years. The company's ability to effectively navigate fluctuations in raw material
prices is a testament to the resilience of its business strategy.

Cello stands out among its peers with the most diverse product portfolio, featuring items made from a
variety of materials such as plastic, steel, opal, glass, copper, and melamine. This diversification extends
across categories like glassware, opalware, melamine, and porcelain, showcasing the company's
commitment to offering a wide range of choices to its consumers.

This helps build a resilient business model, enabling it to grow even through adverse events such as the
Covid-19 pandemic.

Cello Limited 5
Initating Coverage

The company's
consistent foray into new
segments reflects a
proactive approach to
market dynamics,
enabling it to capture
substantial market
share.
Exhibit 12: Consumer glassware revenue (Rs mn)
3,000
2,500
2,000
1,484
Rs mn
1,500
1,000
500
- FY21
FY21
Source: MNCL Research
Revenue contribution from
new products
glassware/writing
instrument and Keeno
stand at 15%, 16% and 4%
respectively for FY23.
Recently launched
businesses contributed
35% of revenue in FY23
Initating Coverage
Impressive track-record and clear growth path
Good track record of building new businesses
The prowess of CELLO's management in expanding and diversifying its business lines is exemplified by
the successful scaling up of opalware, writing instruments, stationery, and cleaning aids. Emerging from
its core Consumer Houseware segment, the company's promoters ventured into the glassware and
opalware business in 2017, marking a strategic expansion under the Cello brand.
CELLO's exceptional track record in entering new businesses and product categories is a testament to its
visionary approach. The company stands as one of the most diversified entities in its domain, showcasing
a robust portfolio across various categories. This achievement is underpinned by the pillars of an
extensive distribution network and efficient manufacturing capabilities, reinforcing CELLO's reputation
as a dynamic and forward-thinking industry player.
Exhibit 13: Writing instruments revenue
2,850
3,000
2,760
2,290
2,500
2,000 1,693
Rs mn
1,500
1,114
1,000
500
-
FY22 FY23
FY22 FY23
Source: MNCL Research
A prime example of the company's successful expansion is the glassware and opalware business
launched under the 'Cello' brand in 2017, achieving substantial revenue growth from Rs.1.5bn in FY21
to Rs.2.8bn in FY23, representing an impressive CAGR of 36.47%.
Similarly, the introduction of writing instruments and stationery products under the brand "Unomax" in
2019 resulted in revenue soaring from Rs.1.1bn in FY21 to Rs.2.8bn in FY23, boasting a remarkable 2-
year CAGR of 60%. These ventures showcase the company's adeptness in entering new segments and
achieving significant growth.
Similarly, cleaning aids business launched in 2017 under “Kleeno” sub-brand was scaled leading to
increase in volume of products sold from 5.35m in FY21 to 7.12m in FY23 at a CAGR of 15.36%. Revenue
from cleaning aids business increased from Rs491.53m in FY21 to Rs667.67m in FY23.
Exhibit 14: New Products Launched during 9MFY24
Source: Company
Cello Limited 6
 Distribution Expansion key to success
The seamless launch of new product ranges by Cello is a testament to its extensive pan-India distribution
network. Notably, the introduction of writing instruments and stationery under the "Unomax" brand in
CY19 witnessed a remarkable surge in volume, from 230mn units in FY21 to an impressive 458.1mn units
CELLO outshines its
peers in the consumer in FY23, reflecting an extraordinary CAGR of ~41%. This success is rooted in the company's strategic
space with the widest augmentation of distributors, coupled with a refined regional approach, intensifying their focus in
distribution reach specific areas.
among listed players. Its
diverse product portfolio Moreover, CELLO's commitment to technological innovation is evident in its investment in the sales
and competitive pricing
force, equipped with an automated order tracking mobile application. This data-driven approach
make it an indispensable
choice for retailers enables precise forecasting of production levels based on dynamic market demand. Leveraging ERP
systems, the company streamlines SKU distribution, ensuring efficient responsiveness to area-specific
demand.

As a dominant player in India's Consumer Houseware sector, CELLO's vast pan-India network spans 717
distributors serving approximately 59,000 retailers. Complemented by extensive networks in writing
instruments and moulded furniture divisions, the company's nationwide sales and distribution network,
supported by a 721-member sales team, thrives across multiple channels.

Exhibit 15: Distribution reach category wise Exhibit 16: Channel Mix

Source: Company Presentation Source: Company Presentation

Exhibit 17: Distribution Strength

Category Players Dealer/distributors Retail outlets
Cello 678 51,900
Milton NA ~55,000
Laopala ~ 200 ~20,000
Borosil ~ 200+ ~14,000+
Consumerware Tupperware ~ 55,000+ Direct sellers ~100+ stores
TTK prestige NA 670+ stores
Stovekraft 700+ 61,400+
Hawkins NA NA
Roxx NA ~6000(MBOs), 4 (EBOs)
Unomax 1,457 59,100
Camlin NA ~1,50,000 +
Linc ~2,650+ ~2,18,000 +
Stationery
DOMS ~4500 NA
~1800 (redistribution stockists), 27
Rorrito ~5,00,000
main stockists
Source: Company, MNCL Research

Cello Limited 7
Initating Coverage
 Noteworthy manufacturing expertise
CELLO's revenue stream relies heavily on its in-house manufacturing, contributing approximately 80%
of its total revenue, encompassing 13 facilities spread across five strategic locations. The remaining 20%,
primarily consisting of steel and glassware products, electronic appliances and cookware products is
CELLO currently operates sourced from third-party contract manufacturers. This business model reflects CELLO's commitment to
five manufacturing units,
planned increases in installed capacities across its diverse product verticals.
with a sixth unit planned
in Falna, Rajasthan. This
strategic expansion is
CELLO owns and operates 13 manufacturing facilities, boasting an impressive installed annual capacity
anticipated to contribute of 57.77 million units of consumer houseware products, 15,000TPA of opalware and glassware, 705
to cost efficiency by million units of writing instruments and stationery products, and 12.8 million units of moulded furniture
reducing freight costs and allied products. The remaining products, predominantly steel and glassware, are strategically
outsourced to third-party contract manufacturers.

A significant milestone for Cello is the imminent commissioning of its 20,000-ton glassware
manufacturing plant in March 2024, representing an investment of Rs. 2bn an anticipated revenue
The strategic move
potential of ~Rs 2.8bn. This strategic move is set to position CELLO as the sole domestic consumer
positions Cello as a products company with an in-house glassware manufacturing unit across all material types. The
first-mover in import company has expanded its opalware capacity in Daman to 25,000TPA from 15,000MTPA in August 2023.
substitution, gaining a
significant advantage in The upcoming glassware manufacturing facility in Rajasthan is strategically equipped with automatic
the Rs.15-18bn inspection machines to ensure precise sorting of glasses. Its location, in close proximity to raw material
glassware industry in
India suppliers, is designed to optimize the supply chain, and the dry weather further enhances the suitability
for glassware manufacturing.

Cello’s operational prowess is further underscored by its adept leveraging of economies of scale and
efficient supply chain management. The company embraces technology and market insights to
maintain optimal inventory levels across its facilities, ensuring stringent adherence to high-quality
standards and best manufacturing practices. This multifaceted strategy positions Cello as a leader in
the consumer products space, poised for sustained growth and innovation.

Exhibit 18: Manufacturing plants

Source: Company Presentation

Exhibit 19: In-house manufacturing benefits

Source: Company Presentation

Cello Limited 8
Initating Coverage

The company expects
consumer division to
major revenue and
EBITDA driver for the
company.
Segmental performance – Consumerware division to
outperform other divisions
The Consumerware division: margin driver
The Consumerware division, constituting approximately 66% of the company's revenues, stands as
Cello’s strongest and oldest pillar. Over the years, Cello has continually enhanced customer acceptance,
introduced new products, and bolstered brand recall through strategic initiatives.
With dedicated focus on distribution, customer satisfaction, and alignment with changing trends,
fashion, and preferences, the Consumerware division is subdivided into two categories: a) Consumer
Glassware, comprising glassware and Opalware products, and b) Consumer Houseware, offering a
diverse range including cookware, kitchenware, plastic bottles, lunch boxes, and Kleeno products,
among others.

Exhibit 20: Consumer revenue Exhibit 21: Revenue split between two sub-categories
120.0%
Rs.mn
14,000 100.0%
11,810
12,000
80.0%
10,000 8,711
60.0% 77.8% 73.7% 76.6%
8,000 6,698
40.0%
6,000
4,000 20.0%
22.2% 26.3% 23.4%
2,000 0.0%
FY21 FY22 FY23
-
FY21 FY22 FY23 Consumer glassware Consumer houseware

Source: MNCL Research Source: MNCL Research

Exhibit 22: Distribution reach among competition Exhibit 23: Gross margins and EBIT margins
Category Players Dealer/distributors Retail outlets %
60.0% 51.9% 53.2% 52.0%
Cello 678 51,900
50.0%
Milton NA ~55,000
Laopala ~ 200 ~20,000 40.0%

Borosil ~ 200+ ~14,000+ 30.0%

~ 55,000+ Direct 20.0% 25.0% 22.5%
25.3%
Consumerware Tupperware sellers
~100+ stores
10.0%
TTK prestige NA 670+ stores
Stovekraft 700+ 61,400+
0.0%
FY21 FY22 FY23
Hawkins NA NA

Roxx NA
~6000(MBOs), 4 Gross margins EBIT margins
(EBOs)
Source: MNCL Research Source: MNCL Research

Over FY21-FY23, CELLO's consumerware division revenues surged from Rs 6,698 mn to Rs 11,810 mn,
with an impressive CAGR of 32.8%. This substantial growth was fueled by new product launches and
heightened demand in the consumer goods sector.

The consumerware division, a major contributor to this growth, is split into two segments. Consumer
glassware, dealing in Glassware and Opalware products, and consumer houseware, encompassing
steel, plastic, cleaning aids, and kitchen appliances products. This strategic division enables CELLO to
comprehensively address diverse needs of its consumer base.

Cello Limited 9
Initating Coverage
Exhibit 24: Vast product category
Soruce: Company presentation
The new glassware plant
should be one-of-a-kind
plant in the country and
will help company reduce
dependency on exports
The consumerware
business covers in-the-
kitchen, on-the-table, on-
the-go and even beyond
that
Initating Coverage
Consumer Glassware
This division encompasses Opalware products such as plates, bowls, and dinnerware, along with
glassware products including glass lunch boxes, storage boxes, glasses, and other drinking ware items.
CELLO ventured into the Opalware division in 2017, and the business has thrived ever since. In the
industry, currently, only three players are recognized, with CELLO positioned as the smallest among the
three based on capacity and revenue.
While acting as an importer for glassware products, primarily focusing on dinnerware items, CELLO has
recently undertaken a capex of Rs 2,500 mn to establish in-house manufacturing for glassware products.
This new capacity is anticipated to be operational by the end of March 2024. Notably, this division stands
out as one of the highly profitable segments for the company.
Consumer Houseware
Cello commenced its business journey with the houseware products division, initially featuring a limited
range of SKUs. The extensive product range includes plastic bottles, jugs, and flasks, along with a variety
of cookware products such as pans, cookers, and kadhais made of steel, iron, and aluminum.
Additionally, the division offers lunch boxes crafted from plastic and steel, storage containers, and
various kitchen appliances like toasters and grillers. This evolution showcases CELLO's commitment to
expanding its product offerings and meeting the diverse needs of consumers.
Cello's Consumer Houseware segment boasts the broadest range of product categories, including
houseware/thermoware, steelware, melamine, appliances, and cleaning products (branded as 'Kleeno').
With houseware/thermoware leading the revenue mix at ~51% in FY23, (consumerware division on a
whole contributing close to 66% of revenues) closely followed by steelware, Cello strategically positions
itself in the Indian consumerware market, which is poised to grow at a CAGR of ~11% over FY23-27E.
The market's robust growth is driven by factors such as favorable demographics, evolving consumer
preferences with increased discretionary spending, enhanced product penetration, rising ownership per
person, a trend toward innovative and aesthetically appealing products, shorter replacement cycles,
gifting trends, and brand loyalty. Cello's diversified offerings align well with the dynamic market trends,
positioning it for sustained growth and market leadership.
Cello Limited 10
Exhibit 25: Consumer houseware Revenues (Rs mn) Exhibit 26: Going forward revenues (Rs mn)
10,000 9,050
14,000 13,155
8,000 11,518
6,421 12,000
9,958
10,000 9,050
6,000 5,214
8,000
4,000 6,000
4,000
2,000
2,000
- -
FY21 FY22 FY23 FY23 FY24 FY25 FY26E

Source: MNCL Research Source: MNCL Research

Opalware and glassware segment to drive the growth and margins for
the company
CELLO recently invested close to Rs 750-800mn to increase Opalware capacity from 15,000 to 25,000
Cello is the third largest
player in the Opalware tonnes, anticipating a boost in revenue and improved margins. Additionally, a glassware facility in
segment. Rajasthan, with a capacity of 20,000 metric tonnes, is underway. Previously an importer, this move
allows CELLO to enter the Rs 15-20 billion market for drinking glassware products. The capex for these
initiatives totals Rs 2500 mn, signaling the company's strategic expansion in the glassware segment.

Opalware division
Opalware is a type of glass-like ceramic dinnerware that is produced from a mixture of natural raw
materials, such as quartz, feldspar, and bone ash. It is known for its durability and resistance to chipping,
making it a popular choice for everyday use. Opalware is also microwave and dishwasher safe, which
adds to its convenience. The category includes a range of products such as plates, bowls, cups, and
saucers, and is widely used in India.

Exhibit 27: Opalware Revenues (Rs mn) Exhibit 28: Opalware Capacity (mn tonnes)
2,500 40,000 36,000
35,000 32,000
2,000
30,000
25,000
MN Tonnes

1,500
25,000
20,000
1,000 15,000
10,000
500
5,000

- 0
FY21 FY22 FY23 La Opala Borosil Cello

Source: MNCL Research Source: MNCL Research

Cello Limited 11
Initating Coverage
Exhibit 29: Retail touchpoints Exhibit 30: Revenue CAGR (Opalware division)
70000 50.0% 46.3%
60000 40.0% 35.9% 34.7%
50000 27.2%
30.0% 24.5%
40000
20.0%
30000
10.0% 6.8%
20000

10000
0.0%
La Opala Borosil Cello
0
Cello La Opala Borosil 21-23 Revenue CAGR 23-26 Revenue CAGR

Source: MNCL Research Source: MNCL Research

Exhibit 31: Market share among the competition

120.0%

100.0%
26.7% 26.7% 24.6% 29.0% 29.8% 29.2%
80.0%

60.0% 29.3% 29.7% 27.6%

34.0% 34.6% 34.9%
40.0%

20.0% 44.0% 43.6% 47.8%

37.0% 35.6% 35.9%

0.0%
FY21 FY22 FY23 FY24E FY25E FY26E
La Opala Borosil Cello

Source: MNCL Research

The company enjoys
close to 30% margins in
this segment, which the
company believes it can
ramp up c.40% in the
next couple of years
Since entering the Opalware division in 2017, CELLO has experienced remarkable market growth, surging
from Rs 2500 mn to Rs 12000 mn in the past six to seven years, even amid heightened industry
competition. In August 2023, the company augmented its capacity from 15,000 to 25,000 tonnes,
underscoring its commitment to expansion. Remarkably, the Opalware division stands out with the
highest EBITDA margins among all CELLO product segments.
Noteworthy is the substantial revenue surge from Rs 1,283 mn to Rs 2,327 mn (approx.) over the FY21-
FY23 period, reflecting an impressive CAGR of 34.7% (according to our estimates). This dynamic
growth underscores CELLO's robust market position and strategic prowess.

Anticipating robust growth, we project the company's revenues to surge from Rs 2,327 mn in FY23 to Rs
4,490 mn in FY26E, reflecting an impressive CAGR of 24.5%. A substantial increase in capacity from
15,000 to 25,000 tons in October 2023 positions CELLO for expanded production. Coupled with growing
industry demand, achieving these revenue targets appears feasible with optimal capacity utilization.
Presently operating in approximately 10,000-12,000 stores, CELLO aims to extend its footprint to
20,000 stores in the near future, further enhancing its market reach and penetration.

Cello Limited 12
Initating Coverage
 Glassware division- exciting times ahead
Glassware refers to a range of products made from glass, such as tumblers, wine glasses, and serving
glasses. It is known for its clarity, which allows for the appreciation of the colour and texture of the
beverage. It is also microwave safe, making it a popular choice for reheating liquids.

Exhibit 32: Glassware range

Source: MNCL Research

Initiated in 2017, the company's dinnerware division presently relies on imports from China, Turkey, and
Thailand. In a strategic move to reduce import dependence, Cello World has invested Rs 2500 mn in
Drinking glassware
market in India is capex, establishing an annual capacity of 20,000 metric tonnes. Expected to yield an asset turnover of
estimated to be in 1.2x, this new facility is anticipated to surpass Opalware division margins. This expansion introduces a
between 15-20bn fresh product line, encompassing lunch boxes, bowls, plates, and various dinnerware and drinking ware
products, aligning with the company's diversification strategy.

In the FY21-FY23 period, glassware revenues surged from Rs 201 mn to Rs 433 mn (approx.), boasting
an impressive CAGR of 46.8% (according to our estimates). After Borosil Ltd, Cello World is set to become
the sole industry player with an in-house manufacturing facility for glassware products. This strategic
leap positions the company to broaden its product portfolio, catering not only to the domestic market
but also expanding its footprint in exports. With in-house manufacturing, product availability becomes
a non-issue, strengthening Cello World's competitive edge in the glassware segment.. We expect the
revenues for the company to grow from Rs 433mn to Rs 1308 mn over FY23-FY26e, registering a CAGR
growth of 46.8%. The growth will be driven by new capacity coming on stream and entry into new
drinking ware products.

Exhibit 33: Glassware Revenue (Rs mn) Exhibit 34: Estimated glassware revenues (Rs mn)
500 1,400 1,308
1,200
400
1,000 872
300 800
600 498
200 433
400
100
200
- -
FY21 FY22 FY23 FY23 FY24E FY25E FY26E

Source: MNCL research Source: MNCL research

Cello Limited 13
Initating Coverage
Exhibit 35: Total Consumer Glassware division revenues (Rs Exhibit 36: Going forward consumer glassware division
mn) revenues (Rs mn)

3,000 2,760 7,000 6,397

2,500 2,290 6,000

5,120
5,000
2,000
1,484 3,752
4,000
Rs.mn

Rs.mn
1,500
2,760
3,000
1,000
2,000
500
1,000
- -
FY21 FY22 FY23 FY23 FY24E FY25E FY26E
Source: MNCL Research Source: MNCL Research

Exhibit 37: Revenue split between consumer glassware and consumer houseware
120.0%

100.0%

80.0%

72.6% 69.2% 67.3%

60.0% 76.6%

40.0%

20.0%
27.4% 30.8% 32.7%
23.4%
0.0%
FY23 FY24E FY25E FY26E
Consumer glassware Consumer houseware

Source: MNCL Research

We see the Opalware and Glassware division as key drivers for Cello's growth. Strategic investments
through capex, diversification into new product categories, and expanded distribution into untapped
markets are poised to propel significant growth and enhance margins in the coming years. Projecting
robust performance, we anticipate a CAGR of 32% for consumer glassware and 13.3% for houseware
over FY23-26E. Consequently, we estimate the overall consumer division to surge from Rs 11,810 mn
to Rs 19,553 mn during the period, delivering an impressive CAGR of 18.3%.

Cello Limited 14
Initating Coverage
 The Writing instruments and Stationery division: Fastest
growing segment for Cello
Cello's writing instruments division stands out as the company's fastest-growing business, boasting best-
in-class gross margins that outpace competitors. With a remarkable CAGR of 60% from FY21 to FY23,
surpassing the industry's 38.6% growth, Cello's prominence in this sector is evident.
Unomax holds the
largest share in export The UNOMAX brand, under which these writing instruments are marketed, positions Cello as the
revenue, leveraging its second-largest player in the industry. The diverse product portfolio includes ballpoint pens, gel pens,
strong relationships with fountain pens, markers, correction pens, metal pens, and mechanical pencils, with a substantial installed
key retailers in the US capacity of 705 million units as of FY23.
and EU
Cello's manufacturing plant, equipped with 60 molding machines, an in-house tool maintenance facility,
and 10 auto assembly machines, operates with state-of-the-art technology. All key manufacturing
processes are automated, ensuring fast and precise production. Certified and compliant with
international manufacturing norms, the company caters to renowned entities like Walmart, Kmart, and
Zebra. The UNOMAX range features the innovative "JET INK TECHNOLOGY," offering a unique ink
formulation for low pressure, easy flow, and exceptionally smooth writing, providing an unparalleled
writing experience.

Exhibit 39: Going forward writing instruments revenues (Rs

Exhibit 38: Writing instruments Revenues (Rs mn)
mn)

Rs.mn Rs.mn
3,000 2,850 4,699
5,000
2,500 3,916
4,000 3,544
2,000 1,693 2,850
3,000
1,500
1,114
2,000
1,000

500 1,000

- -
FY21 FY22 FY23 FY23 FY24 FY25 FY26E
Source: MNCL Research Source: MNCL Research

Exhibit 40: Export division revenue contribution Exhibit 41: Retail touchpoints

45.0% 3,50,000 3,15,000

40.0%
40.0% 3,00,000
35.0% 2,49,354
2,50,000
30.0%
25.0% 20.8%
2,00,000
19.6%
20.0% 1,50,000
15.0%
1,00,000 60,826
10.0%
50,000
5.0%
0.0% 0
Cello Linc Flair Cello Linc Flair

Source: MNCL Research Source: MNCL Research

Until FY23, Cello had a presence in only 55% of regions. Looking ahead, we anticipate the company's
revenues to surge from Rs 2,850 mn to Rs 4,699 mn over FY23-FY26E, reflecting a robust CAGR of 18.1%.
This growth is fueled by heightened capacity utilization, expanding distribution reach, entry into new
geographies, innovative product launches, and an increase in both volume and ASP.

Cello Limited 15
Initating Coverage
 Moulded furniture division – stable but not exciting
The moulded furniture division contributes to 18.4% of sales. The products sold under this division are
through their own brand Cello which include chairs, tables, trolleys, stools, cabinets, ladders, moulds,
bubble-guards, crates, palletes, dustbin and storage items. The company has an annual installed capacity
of 12.8mn units.

Exhibit 43: Going forward moulded furniture revenues (Rs

Exhibit 42: Moulded furniture revenues (Rs mn)
mn)
5,000 4,493
4,106
3,500 3,188 3,306 3,737
4,000
3,000 2,682 3,306
2,500 3,000
2,000
1,500 2,000
1,000
1,000
500
- -
FY21 FY22 FY23 FY23 FY24 FY25 FY26E
Source: MNCL Research Source: MNCL Research

The Indian furniture market, dominated by wood with a 66% share, is witnessing a shift towards metal
and plastic furniture due to wood scarcity. Plastic moulded furniture, particularly, has grown
significantly, reaching INR 142 mn in FY23 from INR 68 mn in 2015, indicating a robust CAGR of 10%. This
segment is expected to continue growing, reaching INR 270 mn by FY27 with a CAGR of about 17%.

Though the company has Cello, operating through its subsidiary Wim Plast Ltd, holds a notable position in the plastic moulded
garnered a decent market furniture market, commanding 2.8% of the overall market and 4.7% of the branded market. The segment
size in this segment, has shown robust revenue growth of approximately 11% over FY21-23 and is poised for further
growth remains a
challenge due to a slow-
expansion, with an expected CAGR of around 11% over FY22-26. The growth is driven by factors like the
moving industry demand for affordable furniture, urbanization, a rising middle-class population, brand preference,
manufacturing efficiency, the growth of the tourism and hospitality industry, and technological
advancements.

Exhibit 44: Division wise historical performance and future growth

Source: MNCL Research

Overall, we expect all the divisions to contribute to the overall growth for the company. The consumer
glassware and the writing instruments are expected to grow much faster than the other divisions. The
company will be looking to enter newer geographies, and introduce new innovative products in the
market, increase their export market foray.

Cello Limited 16
Initating Coverage
 Exhibit 45: Revenue contribution
120%

100%
18% 18% 17% 16%
26% 23%
80%
16% 17% 16% 16%
11% 12%
60%

40%
64% 64% 66% 65% 67% 68%
20%

0%
FY21 FY22 FY23 FY24E FY25E FY26E

Consumerware Writing instruments Moulded furniture

Source: MNCL Research

Exhibit 46: Gross margins

60.0% 54.3% 53.5%
57.1%
50.0% 46.0% 50.2%
52.0% 53.2%
40.0%
41.0%
30.0%

20.0%

10.0%

0.0%
Consumerware Writing instruments Moulded furniture Overall Gross
and stationery margins

FY23 FY26E

Source: MNCL Research

Cello Limited 17
Initating Coverage
 Branded players gaining market share in the
consumerware industry
Market size of Indian consumerware industry (In Rs bn)
Exhibit 47: Indian consumerware industry TAM (Rs bn)
600 565

500

400 377
348
305
300
212
200

100

0
FY15 FY20 FY22 FY23 FY27

Source: MNCL Research, Company

The Indian Consumerware market witnessed a substantial growth from INR 348 billion in FY22 to INR
377 billion in FY23, with a projected CAGR of 10.6% expected over FY23-FY27, reaching INR 565 billion.
This growth is attributed to factors such as the rising disposable income, the trend toward nuclear
families, and an increasing demand for well-organized and functional kitchen spaces.

Branded players gaining share

Exhibit 48: Split between branded and unbranded players
120%

100%

80% 40% 39% 33%

48%
60%

40%
60% 61% 67%
52%
20%

0%
FY15 FY22 FY23 FY27

Branded Unbranded

Source: MNCL Research, Company

In FY15, the unbranded segment held a larger market share at 52%, exceeding the 48% share of branded
players. However, a notable shift has been observed in the industry dynamics, with branded players
progressively gaining ground over unbranded counterparts. As of FY23, Cello has secured an 8% market
share within the branded players' domain.

Forecasts suggest a robust growth trajectory for the branded players sector, outpacing the expansion of
unbranded players. Projections indicate that by FY26, branded players are anticipated to command a
substantial 67% share of the overall consumerware industry. Given Cello's current 8% market share and
the anticipated accelerated growth of the branded players segment, Cello stands to derive significant
benefits from this trend, positioning itself favourably within the evolving landscape of the
consumerware industry.

Cello Limited 18
Initating Coverage
 About The Company
Cello world is a well-established brand with experience of more than six decades in the industry. The
company was incorporated in 1972 and has the most diversified product portfolio among peers which
includes consumer houseware and glassware products, writing instruments and stationery products
moulded furniture and allied products. The company owns and operates 13 manufacturing facilities
across five locations in India which contributes to 79.4% of revenues.

The company’s offerings include cookware, insulatedware, tiffins, plastic bottles, and lunch boxes,
Opalware and glassware products, gel pens, ball pens, markers, highlighters, plastic chairs, plastic tables,
dustbins, plastic storage items etc.

Exhibit 49: Time-Line

Source: Company, MNCL Research

Exhibit 50: Revenue Growth (Rs mn) Exhibit 51: Revenue Contribution
20,000 17,967 120%
18,000 100%
16,000 26% 23% 18%
13,592 80%
14,000 16%
11% 12%
12,000 10,495 60%
10,000
40%
8,000 64% 64% 66%
6,000 20%
4,000 0%
2,000 FY21 FY22 FY23
-
FY21 FY22 FY23 Consumerware Writing instruments Moulded furniture

Source: Company, MNCL Research Source: Company, MNCL Research

Cello Limited 19
Initating Coverage
Exhibit 52: SWOT Analysis <<correct the spelling of distribution>>

Strength
•Strong entry barriers - Capital Intensive
Weakness
•Pan India distribution network with a presence across multiple •Limited growth in the moulded furniture division.
channels •Low demand for plastic furniture in the country
•Diversified product range
•Promoter pedigree
•Innovative products

SWOT Analysis

Opportunity Threat
•Growing demand for opalware products in India •Cheap supply from China and unorgainzed markets
•In-house manufacturing of glassware products. •Competition in Opalware from top 2 competitors.
•Increase in exports contribution.

Source; Company, MNCL Research

Cello Limited 20
Initating Coverage
 Valuation – Household brand, spreading its wings
prudently
Cello, a renowned household brand, has solidified its presence across diverse categories, commanding
a significant market share in consumer houseware (66%), writing instruments & stationery (16%), and
moulded furniture & allied products (18%). With over six decades of experience, Cello has excelled in
scaling up new businesses and establishing itself as a leader in each sector.

The company's robust brand recall in the consumer products industry is a testament to its extensive
experience, continuous product development, and keen understanding of consumer needs. Cello's
diverse product portfolio, boasting around 15,841 SKUs, coupled with its deep distribution network
of 3,300+ distributors and 1,26,000+ retailers, enables swift expansion of existing product categories
and successful scaling up of new ones, as exemplified by the launches of Glassware in 2017 and Writing
Instruments in 2019.
Cello's commitment to manufacturing excellence is reflected in its robust in-house manufacturing
capabilities, constituting approximately 79% of its production. In response to increasing demand and a
strategic move to reduce reliance on glassware imports, the company is actively constructing a new
glassware plant with a capacity of 20,000 MTPA in Falna, Rajasthan. Simultaneously, an expansion of
opalware capacity by 10,000 MTPA at Daman is enhancing self-sufficiency in production.

The company's nationwide distribution strength is supported by a well-organized team, consisting of

721 sales members as of June 2023. Cello's optimization strategies include increasing the number of
distributors while narrowing their coverage areas for enhanced focus, investing in technological
advancements for the sales force, and leveraging ERP systems to rationalize SKUs with distributors for
efficient area-specific demand fulfillment. In summary, Cello stands out as a formidable player in the
consumer space, with a robust foundation for sustained growth and innovation.

We expect a revenue CAGR of 17% over FY23-FY26E driven by the consumer glassware and consumer
houseware division, supported steadily by the writing instruments division as well. EBITDA margins
are likely to expand by more than 200bps to 25.5% over the same period on the back of in-house
manufacturing of glassware products. We expect the company to post an EBITDA CAGR of 20% and
PAT CAGR of 22% over FY23-FY26E. At CMP 812, stock is trading at 36.2x FY25E and 30.3x FY26E. We
value the stock at 40x FY26e eps of 27 and arrive at a target price of 1100, an upside of 36%.

Cello Limited 21
Initating Coverage
 Peer comparison
Exhibit 53: Revenue CAGR
Revenue Revenue CAGR FY23-
Particulars (in Rs mn)
FY23 FY24E FY25E FY26E FY26E

Cello 17,967 20,991 24,660 28,745 17.0%

LaOpala 4,523 3,893 4,594 5,513 6.8%
Borosil Ltd 7,416 9,448 11,628 13,676 22.6%
Linc Ltd 4,868 5,174 6,584 7,527 15.6%
Source: MNCL Research

Exhibit 54: EBITDA CAGR

EBITDA EBITDA CAGR FY23-
Particulars (in Rs mn)
FY23 FY24E FY25E FY26E FY26E
Cello 4,205 5,199 6,192 7,319 20.3%
LaOpala 1,722 1,507 1,789 2,214 8.7%
Borosil Ltd 667 1,525 2,174 2,644 58.3%
Linc Ltd 614 594 877 1,055 19.8%
Source: MNCL Research

Exhibit 55: OPM

OPM FY23 FY24E FY25E FY26E

Cello 23.40% 24.80% 25.10% 25.50%

LaOpala 38.10% 38.70% 38.90% 40.20%
Borosil Ltd 9.00% 16.10% 18.70% 19.30%
Linc Ltd 12.60% 11.50% 13.30% 14.00%
Source: MNCL Research

Exhibit 56: PAT

PAT
Particulars (in Rs mn) PAT CAGR FY23-FY26E
FY23 FY24E FY25E FY26E
Cello 3,645 4,373 5,228 6,048 18.4%
LaOpala 1,230 1,372 1,484 1,823 14.0%
Borosil Ltd 519 768 1,165 1,515 42.9%
Linc Ltd 374 350 549 686 22.4%
Source: MNCL Research

Exhibit 57: Return Ratios

ROE ROCE
Particulars
FY24E FY25E FY26E FY24E FY25E FY26E
Cello 51.3% 35.2% 32.8% 32.8% 26.4% 26.1%
LaOpala 16.9% 17.0% 19.4% 15.6% 17.4% 20.4%
Borosil Ltd 13.1% 16.6% 17.7% 16.2% 20.2% 20.2%
Linc Ltd 17.0% 22.0% 22.6% 21.9% 28.0% 29.3%
Source: MNCL Research

Cello Limited 22
Initating Coverage
 Multiple reasons for Cello having an edge over competition
▪ Diversified Product Portfolio: Cello boasts of one of the most diversified product portfolios in the
country, spanning consumer houseware, glassware, writing instruments, and moulded plastic
products. This diversification mitigates the risk of prolonged slowdowns in any specific segment.
▪ Clever Brand Strategy: Despite operating across multiple segments, Cello strategically uses its brand
name for most products, employing an effective umbrella advertising approach.
▪ Admired Brand Recognition: Cello has earned a strong reputation as one of the most admired
brands in the country, thanks to clever advertisements featuring celebrity endorsements and
memorable taglines like "Cello – Companion for Life" and "Don’t just write – Glide."
▪ Extensive Distribution Network: Operating three separate channels for its segments, Cello has a
robust distribution network with 58,716 outlets for consumer houseware and 60,826 outlets for
writing instruments. The company has significant room for further expansion and cross-selling
opportunities.
▪ Proven Scalability: Cello has demonstrated a track record of successfully scaling up new businesses
and product categories in its journey. Notable examples include re-entering the writing instruments
segment and venturing into opalware, highlighting the company's agility and innovation in
launching new products.
Cello's growth strategy is multi-faceted, encompassing a comprehensive approach to market expansion.
The company aims to solidify its presence in core regions by selling existing products and introducing
new offerings. Simultaneously, it plans to leverage its established distribution network by introducing
new products in these core regions. Furthermore, Cello seeks to extend its footprint by launching
existing products in new regions, capitalizing on its well-established brand equity. Additionally, the
company is poised for innovation, introducing new products tailored for specific new regions to diversify
its portfolio and tap into emerging markets.

Customer ratings and views:

Exhibit 58: Borosil Ltd (Larah) review and pricing

Source: MNCL Research

Cello Limited 23
Initating Coverage
 Exhibit 59: La Opala- pricing and review

Source: MNCL Research

Exhibit 60: Cello- revenue and pricing

Source: MNCL Research

Cello Limited 24
Initating Coverage
 Financial Analysis

Exhibit 61: Revenue Growth (Rs mn)

35,000

30,000 28,745
24,660
25,000
20,991
20,000 17,967

15,000 13,592
10,495
10,000

5,000

-
FY21 FY22 FY23 FY24E FY25E FY26E

Source: MNCL Research Estimates

We expect the company to post revenue growth of 17% CAGR over FY23-26E, largely driven by growth
in the consumer glassware segment.

Exhibit 62: Revenue breakup

120%

100%
One of the most diversified 18% 18% 17% 16%
26% 23%
consumer companies in 80%
India 16% 17% 16% 16%
11% 12%
60%

40%
64% 64% 66% 65% 67% 68%
20%

0%
FY21 FY22 FY23 FY24E FY25E FY26E

Consumerware Writing instruments Moulded furniture

Source: MNCL Research Estimates

Exhibit 63: EBITDA (Rs mn) and OPM Growth

8,000 7,319 27.0%
7,000 26.4% 6,192 26.0%
6,000 5,199 25.5%
25.1% 25.0%
5,000 4,205
24.5% 24.8%
4,000 3,336 24.0%
2,767 23.4%
3,000
23.0%
2,000
22.0%
1,000
- 21.0%
FY21 FY22 FY23 FY24E FY25E FY26E

EBITDA OPM

Source: MNCL Research Estimates

Cello Limited 25
Initating Coverage
 We expect the company to post an EBITDA growth of 20% over FY23-26E, while margins will likely sustain
at close to 25.5%. Margins will be driven by consumer glassware segment.

Exhibit 64: PAT Growth (Rs mn)

6,000
5,228
5,000
4,373

4,000 3,645

2,851
3,000
2,195
2,000 1,655

1,000

-
FY21 FY22 FY23 FY24E FY25E FY26E

Source: MNCL Research Estimates

We expect the company to post a PAT growth of 19% over the same period.

Exhibit 65: Return Ratios

90.0%
84.7%
80.0%
70.0%
60.0%
50.0% 51.3%
40.0% 44.9% 35.2% 32.8%
30.0% 32.8% 26.1%
20.0% 26.4%
10.0%
0.0%
FY23 FY24E FY25E FY26E

ROE ROCE

Source; MNCL Research Estimates

Key risks to our thesis

• The unbranded players gaining market share from the branded players in the market.

• Slowdown in the Opalware and glassware market.

Cello Limited 26
Initating Coverage
Financials (Consolidated)

Quarterly Statement
Y/E March (Rs mn) Q1FY24 Q2FY24 Q3FY24
Particulars
Net sales 4,718 4,890 5,271
Cost of Raw materials consumed 2,237 2,280 2,557
Staff cost 448 475 492
Other operational expenses 842 932 900
Operating Profit (Core EBITDA) 1,192 1,203 1,321
Depreciation 118 127 147
EBIT 1,074 1,076 1,174
Interest 6 7 5
Other Revenue/Income 81 107 45
Exceptional Items - - -
Profit Before Tax 1,149 1,176 1,214
Tax 321 310 307
Profit After Tax 828 866 907

Growth (%)
Revenue
EBITDA
PAT

Margin (%)
EBITDA 25.3% 24.6% 25.1%
EBIT 22.8% 22.0% 22.3%
PAT 17.6% 17.7% 17.2%
Source: MNCL Research Estimates

Cello Limited 27
Initating Coverage
Income Statement
Y/E March (Rs mn) FY21 FY22 FY23 FY24E FY25E FY26E

Revenues 10,495 13,592 17,967 20,991 24,660 28,745

Materials cost 5,214 6,786 8,955 10,040 11,637 13,378

% of revenues 50% 50% 50% 48% 47% 47%

Employee cost 968 1,319 1,576 1,931 2,244 2,587

% of revenues 9% 10% 9% 9% 9% 9%

Others 1,544 2,151 3,231 3,820 4,587 5,462

% of revenues 15% 16% 18% 18% 19% 19%

EBITDA 2,767.4 3,335.7 4,205.4 5,199.0 6,192.4 7,318.6

EBITDA margin (%) 26.4% 24.5% 23.4% 24.8% 25.1% 25.5%

Depreciation & Amortization 489.0 475.5 503.3 633.2 713.2 763.2

EBIT 2,278 2,860 3,702 4,566 5,479 6,555

Interest expenses 22.8 28.5 17.6 20.7 18.5 16.3

PBT from operations 2,256 2,832 3,685 4,545 5,461 6,539

Other income 101.3 159.3 167.4 314.9 369.9 431.2

Exceptional items 0 0 0 0 0 0

PBT 2,357 2,991 3,852 4,860 5,831 6,970

Taxes 701 796 1,001 1,215 1,458 1,743
Effective tax rate (%) 30% 27% 26% 25% 25% 25%
Reported PAT 1,655 2,195 2,851 3,645 4,373 5,228
Source: MNCL Research Estimates

Cello Limited 28
Initating Coverage
Key Ratios
FY21 FY22 FY23 FY24E FY25E FY26E

Growth Ratio (%)

Revenue NA 29.5% 32.2% 16.8% 17.5% 16.6%
EBITDA NA 20.5% 26.1% 23.6% 19.1% 18.2%
PAT NA 32.6% 29.9% 27.9% 20.0% 19.5%
Margin Ratios (%)
EBITDA 26.4% 24.5% 23.4% 24.8% 25.1% 25.5%
PBT from operations 22.5% 22.0% 21.4% 23.2% 23.6% 24.2%
PAT 15.8% 16.2% 15.9% 17.4% 17.7% 18.2%
Return Ratios (%)
ROE NA NA 84.7% 51.3% 35.2% 32.8%
ROCE NM 54.7% 44.9% 32.8% 26.4% 26.1%
Turnover Ratios (days)
Gross block turnover ratio (x) 3.1 3.8 4.3 3.3 3.5 3.8
Debtors 129 109 94 90 90 90
Inventory 107 101 87 85 84 80
Creditors 69 68 55 65 65 65
Cash conversion cycle 167 143 127 110 109 105
Solvency Ratio (x)
Net debt-equity (3.0) 5.0 0.9 0.3 0.1 (0.1)
Debt-equity (3.0) 5.2 1.0 0.3 0.2 0.1
Interest coverage ratio 104.6 105.9 220.4 236.3 316.4 428.2
Gross debt/EBITDA 1.2 1.4 0.8 0.6 0.4 0.3
Current Ratio 0.8 1.0 2.2 2.4 3.0 3.8
Per share Ratios (Rs)
Adjusted EPS NM NM 14.6 18.7 22.4 26.8
BVPS NM 22.1 84.9 51.1 66.1 84.0
CEPS NM 67.4 84.6 20.2 24.0 28.2
Valuation (x)*
P/E (adjusted) NM 0.0 55.4 43.4 36.2 30.3
P/BV (0.0) 0.0 37.6 14.4 11.8 9.3
EV/EBITDA 0.8 10.5 8.0 33.4 27.7 23.1
Source: MNCL Research Estimates

Cello Limited 29
Initating Coverage
Balance Sheet

Y/E March (Rs mn) FY21 FY22 FY23 FY24E FY25E FY26E

SOURCES OF FUNDS
Equity Share Capital 0 0 975 975 975 975
Reserves & surplus -1,068 876 2,390 9,874 13,057 16,862
Shareholders' fund -1,068 876 3,365 10,849 14,032 17,837
Minority Interest 1,721.9 1,851.3 1,999.4 1,999.4 1,999.4 1,999.4
Lease and Liability 104 87 71 71 71 71
Total Debt 3221 4525 8092 2951 2641 2331

Def tax liab. (net)

82 84 84 84 84 84
Total Liabilities 4,061 7,423 13,611 15,954 18,827 22,323
Gross Block 3,429 3,594 4,173 6,332 7,132 7,632
Less: Acc. Depreciation 1,053 1,207 1,636 2,269 2,983 3,746
Net Block 2,376 2,387 2,537 4,063 4,150 3,886
Right to use 212 193 176 176 176 176

Capital WIP
43 118 209 300 - -
Other intangible assets 4 33 52 52 52 52
Goodwill 0 0 0 0 0 0
Other Non-Current Assets 175 304 639 639 639 639

Investments 1,197 1,500 1,769 1,769

1,769 1,769
Net Fixed Assets 4,007 4,535 5,381 6,522
6,998 6,785
Inventories 3,069 3,765 4,298 4,888 5,675 6,300
Sundry debtors 3,714 4,067 4,623 5,176 6,081 7,088

Cash 4,723
325 547 499 471 2,215
Loans & Advances 14 20 12 12 12 12

Other assets
336 402 704 704 704 704
Total Current Asset 7,458 8,802 10,136 11,250 14,687 18,827
Trade payables 984 1,255 1,342 1,788 2,072 2,382

Other current Liab. 6,367 4,598

525 467 533 604
Provisions
53 60 39 39 39 39
Net current assets 54 2,888 8,230 8,956 12,042 15,801
Total Assets 4,061 7,423 13,611 15,954 18,827 22,323

Cello Limited 30
Initating Coverage
Cash Flow
Y/E March (Rs mn) FY21 FY22 FY23 FY24E FY25E FY26E

Operating profit bef working capital changes 2,838 3,443 4,434 5,514 6,562 7,750

Trade and other receivables (542) (420) (636) (553) (905) (1,007)
Inventories (127) (716) (532) (591) (787) (625)
Trade payables 325 362 89 446 284 310
Others 122 47 (71) (58) 66 72
Cash flow from operations before tax 2,617 2,715 3,284 4,759 5,221 6,499
Direct taxes (681) (843) (1,010) (1,215) (1,458) (1,743)
Cash flow from operations 1,936 1,873 2,274 3,544 3,763 4,756
Net Capex (254) (491) (1,121) (2,250) (500) (500)
Others (279) (2,127) (4,447) - - -
Cash flow from investments (532) (2,618) (5,568) (2,250) (500) (500)
FCF 1,404 (745) (3,295) 1,294 3,263 4,256
Issue of share capital - - 4,599 - - -
Increase/(decrease) in debt (2,971) 2,519 (1,226) - - -
Dividend 1,659 - - - - -
Cash flow from financing (1,328) 941 3,238 (1,322) (1,518) (1,749)
Net change in cash 76 196 (57) (29) 1,745 2,508
Source: MNCL Research Estimates

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Key to MNCL Investment Rankings

Buy: Upside by >15%, Accumulate: Upside by 5% to 15%, Hold: Downside/Upside by -5% to +5%, Reduce: Downside by 5% to 15%, Sell: Downside by >15%

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