The shares of Cello World may list at a premium of 22-25 percent on bourses on November 6, according to analysts. The issue received a strong response from investors and now analysts expect the stock to open somewhere between Rs 790 and Rs 810 against the offer price of Rs 648.
In the grey market, the stock was commanding a premium of 24 percent. The grey market is an unofficial trading platform where shares get traded well before the allotment in the IPO and until the listing day. Most investors track the grey market premium (GMP) of a stock to get an idea of the listing price.
“The subscription was in line with our estimate due to strong fundamentals in the company and high-growth industry dynamics. On valuation parse, it seems the issue was reasonably priced reflecting an expected revenue and profit growth,” said Prashanth Tapse, Sr VP Research at Mehta Equities.
Also Read: Cello World IPO: 10 things to know
Cello World’s public issue was subscribed 38.9 times. Qualified institutional buyers (QIB) bought 108.57 times the allotted quota, high net worth individuals (HNI) picked 24.42 times and retail investors bid 3.06 times. The price band for the IPO, which opened on October 30 and closed on November 1, was fixed at Rs 617-648 per share.
Considering the change in the market momentum post-US Fed meeting, Tapse expects a healthy listing gain in the range of 22-25 percent from the issue price. “We strongly believe that the Cello World IPO gives allotted investors a long-term opportunity, hence recommending all allotted investors ‘Hold for long term’ while those who failed to get allotments can accumulate on the listing day,” said Tapse.
The Mumbai-based firm raised Rs 1,900 crore via a maiden public issue that comprised only an offer-for-sale (OFS) by the promoters. Since the offer did not have a fresh issue component, all the money, excluding issue expenses went to the promoters. However, the main objective of the offer was to achieve the benefits of listing the equity shares on the stock exchanges.
Parth Shah, Research Analyst, StoxBox expects the stock to open at a premium of around 25 percent due to sustained revenue and PAT growth, which rose at a CAGR of 30.8 percent and 31.2 percent, respectively, during the FY21-23 and a strong ROCE of 44.5 percent in FY23.
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“We remain positive that the issue will open in premium and recommend investors who have received allotment to book profits on the opening day and consider buying after seeing its financial performance in the medium term,” said Shah.
Cello World has a strong presence in consumer houseware, writing instruments and stationery, moulded furniture and allied products and consumer glassware categories. The firm, which offered 15,891 stock-keeping units (SKUs) across its product categories as of June 2023, operates 13 manufacturing facilities across five locations and is setting up a glassware manufacturing facility in Rajasthan.
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