Buy Cello World; target of Rs 678: Prabhudas Lilladher

Prabhudas Lilladher is bullish on Cello World has recommended buy rating on the stock with a target price of Rs 678 in its research report dated August 13, 2025.

Broker Research

August 14, 2025 / 14:35 IST

buy

26 Aug, 2025 12:21

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Prabhudas Lilladher's research report on Cello World

We downward revise CELLO’s FY26/27E earnings by 9.3%/8.7% factoring higher fix cost and continued margin pressure across segments. Consumerware revenue (69.1% of total revenue) reported soft growth due to early onset of rains, which affected hydration category, while glassware products grew 50%. Writing Instruments faced weak demand in both export and domestic markets, though the company expects demand improvement in FY26 driven by new launches, higher advertising spends to drive market share expansion, and a strong export order pipeline. CELLO’s EBITDA margin contracted by 520bps, impacted by higher energy and employee costs, along with increased expenses from the new glassware facility in Rajasthan and elevated sales promotion activities, including schemes and discounts. The company expects to improve its demand scenario in H2FY26 with improved demand, supported by recovery in exports, seasonal festive demand and increase in capacity utilizations.

Outlook

We estimate revenue/EBITDA/PAT CAGR of 11.8%/13.3%/16.8% for FY25-27E. We assign SOTP-based target price of Rs678 (Rs746 earlier), implying PE of 33x FY27E. Maintain ‘BUY’.

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