Stock Of The Day: Cello World Shares Soar To All-Time High On Rs 775-Crore QIP
The stock rose as much as 6.76% during the day to Rs 1,025 apiece on the NSE.
Shares of Cello World Ltd. surged nearly 7% on Thursday after it launched a qualified institutional placement to raise Rs 775 crore.
The company plans to issue 86.5 lakh equity shares with a floor price of Rs 896.90 apiece, a discount of 6.7% from the previous close. It may offer a discount of not more than 5% on the floor price for the issue, according to an exchange filing.
Cello World's stock rose as much as 6.76% during the day to Rs 1,025 apiece on the NSE. It was trading 4% higher at Rs 1,000 per share, compared to a 0.4% advance in the benchmark Nifty at 10:10 a.m.
The share price has risen 25.5% on a year-to-date basis and 26.2% in the last 12 months. The total traded volume so far in the day stood at 2.3 times its 30-day average. The relative strength index was at 71.17, implying that the stock may be overbought.
Use Of Net Proceeds
The funds raised from this share issue will be utilised for several strategic purposes:
Investment in Cello Consumerware Pvt.: The company plans to invest a significant portion of the proceeds into Cello Consumerware. This investment will be directed towards setting up a new facility for the production of stainless-steel bottles, plastic insulated ware and household articles.
Repayment of borrowings: A part of the proceeds will be allocated to repay certain borrowings taken by the company's subsidiaries.
Augmenting working capital: The remaining funds will be used to bolster the company's working capital needs.
Financial Performance, Future Outlook
In the last financial year, the company achieved Rs 2,000 crore in total revenue, driven primarily by consumer ware. With a strong gross profit margin of 52.6% and Ebitda margin of 26.7%, its net profit rose 24% to Rs 333 crore. The operating cash flow remained healthy at Rs 231 crore.
The company aims for a 15–17% revenue growth in the current fiscal, with the Ebitda margin expected to hold steady at 24–26%.
The launch of a new facility in Rajasthan underscores strategic expansion in the glassware segment, targeting Rs 460–475 crore in revenue from glassware and opalware. Plans for product premiumisation reflect a strategy to enhance margins through value-added offerings.
Analysts' Recommendations
Out of the seven analysts tracking the company, six have a 'buy' rating on the stock and one recommends 'hold', according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 1.4%.
