Cello World’s Rs 1900 crore IPO opens on Monday. What GMP signals ahead of subscription?

The initial public offer (IPO) of Cello World will open for subscription on Monday. The company has fixed a price band of 617-648 per share for its offer.

Ahead of the issue opening, the company’s shares are commanding a healthy premium of Rs 90 in the unlisted market.

The stationery maker has raised Rs 567 crore from anchor investors where marquee investors including Goldman Sachs, Nomura, SBI Life, Morgan Stanley among others participated.

The issue, which closes on November 1, is completely an offer for sale worth Rs 1,900 crore. Investors can bid for a minimum of 23 shares in one lot and in multiples thereafter.

Under the OFS, promoters Pradeep Ghisulal, Pankaj Ghisulal Gaurav Pradeep and selling shareholders Samgeeta Pradeep, Bibita Pankaj, Ruchi Gaurav Rathod will offload their partial stakes in the company.

About 50% will be available for allocation on a proportionate basis to qualified institutional buyers, 15% for non-institutional investors and 35% for retail investors. The IPO also includes a reservation of up to Rs 10 crore for subscriptions by eligible employees.

Net proceeds from the IPO will entirely go to the selling shareholders.Mumbai-based Cello World boasts an extensive product portfolio across three key categories – consumer houseware, writing instruments and stationery, and moulded furniture and related products.

It offered a wide range of 15,841 stock-keeping units (SKUs) spanning its various product categories, as of March 2023. In 2017, it ventured into the glassware and opal ware business under the Cello brand.

Throughout the fiscal years ending in 2021, 2022, and 2023, the company undertook no significant changes to its business operations, apart from the acquisition of shares in Wim Plast and the acquisition of business entities by Cello Industries, Cello Household Products, and Unomax Stationery through a slump sale.

During FY21-FY23, it launched 397, 169, and 380 new products across its three product categories, respectively.

For FY23, consolidated revenue from operations increased 32% to Rs 1796.69 crore against Rs 1359.18 crore a year ago. Net profit increased by 30% from Rs 219.52 crore in FY22 to Rs 285 crore in FY23.

It had the highest ROCE amongst its peers between FY21-23 and the highest EBITDA margin for fiscal 2021, 2022, and 2023.

Kotak Mahindra Capital Company, ICICI Securities, IIFL Securities, JM Financial and Motilal Oswal are the book-running lead managers and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.

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