Consumer goods company Cello World’s initial public offering (IPO) was subscribed 38% on the first day of the issue. The non-institutional investor (NII) portion was almost fully subscribed, while the retail portion was subscribed 35% the end of Monday.
The IPO opened on October 30 and will close on November 1, with a price band set at ₹617 to ₹648. Investors can bid for a minimum of 23 shares and in multiples thereof. The company aims to raise up to ₹1,900 crore through the public issue.
Prior to the IPO, Cello World raised ₹567 crore from anchor investors on Friday. It is important to note that the IPO is a complete offer for sale, and no proceeds from it will go to the company.
According to data from the Bombay Stock Exchange (BSE), here is the subscription status of different types of investors:
– Qualified Institutional Buyers: 0.02 times subscribed
– Non-institutional Investors: 0.94 times subscribed
– Retail Investors: 0.35 times subscribed
– Total: 0.38 times subscribed
Analysts suggest that Cello World holds a dominant market position. The company manufactures, distributes, and sells various consumer goods such as drinkware, insulated ware, dinnerware, serveware, and glassware across India. It also offers products in categories like cleaning supplies, stationery, small kitchen appliances, moulded furniture, and air coolers.
A report BP Equities highlights the distribution advantage enjoyed Cello World due to its large off-take per retailer. Retailers find it beneficial to stock Cello’s products because of the comprehensive range provided the brand. However, the company faces risks related to fluctuations in raw material prices, supply chain issues, and not owning trademarks for key brands.
Cello World acknowledges that any negative impact on its brand name due to competitor actions can adversely affect its reputation and business. The company’s profitability is also dependent on maintaining its existing capacity utilization rate.
A report Geojit states that factors such as consumer awareness towards safety and quality, shorter replacement cycles, loyalty to established brands, and increasing disposable income contribute to the growth of the branded consumerware market in India. The report gives a “Subscribe” rating for the IPO on a long-term basis.
Choice Broking also recognizes Cello World’s dominant position in the market. However, due to the highly priced issue, they assign a “Subscribe with Caution” rating for the IPO.
Source: Business Insider
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