Cello World IPO open for subscription: GMP, issue details, price band, risks, 10 key things to know before investing

Cello World IPO has opened for subscription today (Monday, October 30) and will close on Wednesday, November 1. Cello World IPO has raised ₹567 crore from anchor investors on Friday, October 27.

Cello World primarily deals in three categories such as stationery and writing instruments, moulded furniture, consumer housewares, and associated goods. 

Cello was founded by the late Ghisulal Dhanraj Rathod, formerly promoter and father of two current promoters, Pradeep Ghisulal Rathod and Pankaj Ghisulal Rathod.

Also Read: Cello World IPO opens on October 30, price band set at ₹617-648 per share

Cello World IPO's floor price is 123.40 times the face value of the equity shares and the cap price is 129.60 times the face value of the equity shares. The price/earnings ratio based on diluted EPS for fiscal 2023 at the floor price is 46.85 times and the cap price is 49.20 times.

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The company's comparable listed peer are Borosil Ltd (with P/E of 50.59), Kokuyo Camlin Ltd (with P/E of 57.97), La Opala RG Ltd (with P/E of 40.81), Stove Kraft Ltd (with P/E of 51.49), TTK Prestige Ltd (with P/E of 43.78), Linc Ltd (with P/E of 33.39), and Hawkins Cookers Ltd (with P/E of 40.23).

For FY23, consolidated revenue from operations rose about 32% on year to ₹1,796.69 crore, while net profit increased 29.86% to ₹285 crore.

Here are the 10 key things to know about Cello World IPO;

Cello World IPO subscription status on day 1: At 11:25 IST, Cello World IPO has been subscribed 5% on day 1. Cello World IPO retail investors portion was subscribed 8%, NII portion was subscribed 6%, and Qualified Institutional Buyers (QIB) portion were yet to be booked. 

Cello World IPO price band: Cello World IPO price band has been fixed in the range of ₹617 to ₹648 per equity share of face value of ₹5.

Cello World IPO lot size: Cello World IPO lot size is 23 equity shares and in multiples of 23 equity shares thereafter.

Also Read: IPOs this week: Cello World IPO to Mish Designs IPO; 7 new issues, 1 listing to keep primary market buzzing

Cello World IPO reservation: Cello World IPO reserved not more than 50% of the shares in the public issue for Qualified Institutional Buyers (QIB), not less than 15% for Non Institutional Investors (NII), and not less than 35% of the offer is reserved for Retail Investors. A discount of ₹61 per equity share is being offered to eligible employees bidding in the employee reserve portion.

Cello World IPO details: Cello World IPO is a complete offer for sale (OFS), where promoters and other shareholders will sell shares of ₹5 face value totalling ₹1,900 crore. The offer includes a reservation of up to ₹10 crore for subscription by eligible employees.

The issue will see promoter Pradeep Ghisulal Rathod offload ₹300 crore worth of shares, ₹736 crore by Pankaj Ghisulal Rathod, ₹464 crore by Gaurav Pradeep Rathod, ₹200 crore by Sangeeta Pradeep Rathod, ₹100 crore by both Babita Pankaj Rathod and Ruchi Gaurav Rathod.

Cello World IPO listing date and allotment details: Tentatively, Cello World IPO basis of allotment of shares will be finalised on Monday, November 6 and the company will initiate refunds on Tuesday, November 7, while the shares will be credited to the demat account of allottees on Wednesday, November 8. Cello World IPO shares are likely to be listed on BSE and NSE on Thursday, November 9. If in case, the company decides to switch to T+3 norm, the dates will get preponed.

Lead Manager and Registrar of Cello World IPO: The book running lead managers of the Cello World Limited IPO are Kotak Mahindra Capital Company Limited, ICICI Securities Limited, IIFL Securities Ltd, JM Financial Limited, and Motilal Oswal Investment Advisors Limited. The registrar of the issuance is Link Intime India Private Ltd.

Cello World IPO key risks: The company's RHP indicates that the two biggest risks are changes in the cost of raw materials, particularly plastic granules and plastic polymers, and disruptions in their supply, which could have a negative impact on the operations, financial situation, business, and cash flows.

The company's ability to sell and distribute its products depends on its distribution network in India and abroad; any disruption in this network could have a negative impact on the company's operations, financial situation, cash flows, and business results.

Cello World IPO GMP today: Cello World IPO GMP today or grey market premium is +120. This indicates Cello World share price were trading at a premium of ₹120 in the grey market on Monday, according to investorgain.com.

Considering the upper end of the IPO price band and the current premium in the grey market, the estimated listing price of Cello World share price was indicated at ₹768 apiece, which is 18.52% higher than the IPO price of ₹648.

'Grey market premium' indicates investors' readiness to pay more than the issue price.

Cello World IPO review: Choice Equity Broking states that Cello World IPO asks for a TTM P/E multiple of 48.8x at a higher price band (compared to its TTM earnings per share of Rs. 13.3), which is significantly more than the peer average of 38.6x. The issue is therefore overvalued.

“On the back of diversified product portfolio, wide distribution reach and established brands, the company has maintained a dominant position in the domestic Consumerware market. Its expansion in the glassware products, would further strengthen its position in the market. There are growth tailwinds for the sector and CWL is well placed to benefit from the same. But due to highly priced issue, we are assigning a “Subscribe with Caution” rating for the issue,” the brokerage said.

Also Read: Cello World IPO: GMP, subscription status, review, other details. Apply or not?

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.