Buy Cello World; target of Rs 750: ICICI Securities

ICICI Securities's research report on Cello World

Cello delivered healthy Q2FY26 partially aided by festive buying and favourable base. We note multiple growth drivers are likely to unfold in H2FY26-27 as (1) Re-acquisition of the 'Cello' brand for writing instruments from BIC will allow Cello to leverage its own manufacturing units and distribution to drive market share gains in pens. (2) As Cello brand will be only with Cello group for all consumer segments, it will allow the company to strengthen the investments in new launches, product differentiation, new designs and relaunches. (3) Glassware plant hit break-even at even at 60% utilisation levels. We model it to be chief margin driver in FY27-28E. (4) Commissioning of new plant for steel products by Dec'25 would aid import substitution. (5) Cello is on track for guided revenue growth of 12–15% YoY in FY26,

Outlook

With operating EBITDA margin of 22 23%. Maintain BUY with a DCF-based revised TP of INR 750 (earlier INR 700; implied P/E of 34x FY28E EPS).