Cello World Makes a Strong Debut on Stock Exchanges, Surpassing Grey Market Expectations
Cello World, a renowned consumer goods company, made its debut on the stock exchanges on Monday with a 28% premium. This exceeded the expectations of the grey market, albeit a small margin. The grey market had anticipated a 25% listing gain for the stock.
The stock listed at ₹831, a significant increase from its IPO price of ₹648. This resulted in a gain of ₹183. According to the Bombay Stock Exchange, the market cap of the company now stands at ₹17,636 crore.
Investor interest was evident in the ₹1,900 crore IPO of Cello World, with subscription reaching nearly 39 times the shares on offer. Qualified Institutional Buyers (QIBs) showed aggressive bidding for the issue, subscribing 108 times as of Wednesday evening. The non-institutional investor (NII) portion was subscribed 24 times, while the retail portion was oversubscribed thrice over. The price band for the IPO was fixed at ₹617 to ₹648.
Recent market debuts have generally resulted in positive listing returns, with only a few exceptions. The listing gains of some recent market debuts are as follows:
– Blue Jet Healthcare: 14.4%
– IRM Energy: -5%
– Plaza Wires: 48%
– Updater Services: -5.3%
– JSW Infra: 28.5%
– Yatra: -4%
Analysts assert that Cello World holds a dominant market position. The company manufactures, distributes, and sells a diverse range of products including drinkware, insulated ware, dinnerware, serveware, and glassware throughout India. It also offers products in categories such as cleaning supplies, stationery, small kitchen appliances, molded furniture, and air coolers.
A report BP Equities highlights Cello’s distribution advantage, which results from its substantial off-take per retailer. Retailers benefit from stocking Cello’s products due to the comprehensive range offered the brand, which enables them to cater to various customer demands under one brand.
However, the company does face certain risks, such as fluctuations in raw material prices and supply chain issues. Additionally, Cello does not own the trademark for key brands like ‘Cello’, ‘Unomax’, ‘Kleeno’, and ‘Puro’. Furthermore, one of its competitors also utilizes the ‘Cello’ brand name for its writing instruments business. Any adverse impact on Cello’s brand name due to the actions of competitors could have a negative effect on its reputation and business. The company’s margins and profitability rely on maintaining its existing capacity utilization rate.
An industry report Geojit emphasizes the growth prospects of the branded consumer ware market in India. Factors contributing to this growth include consumer awareness towards safety and quality, shorter replacement cycles, a focus on product aesthetics, loyalty to established brands, increasing disposable income, and the nuclearization of families. Geojit rates the Cello World issue as ‘Subscribe’ on a long-term basis.
Choice Broking also recognizes Cello World’s dominant position in the market and expects the company to benefit from the growth tailwinds in the sector. However, due to the issue being highly priced, they assign a ‘Subscribe with Caution’ rating for the IPO.
Cello World’s successful debut on the stock exchanges, surpassing grey market expectations, highlights the company’s strong market position and growth prospects in the consumer goods industry.