Cello World stock jumps over 6% to new high after launch of ₹730 crore QIP

Shares of Cello World soared over 6 percent to its record high in intraday trading on Thursday following the launch of a qualified institutions placement (QIP) worth ₹730 crore aimed at institutional investors. The floor price of the QIP has been fixed at ₹896.09, at a discount from its previous closing price of ₹961.40.

The stock rose as much as 6.5 percent to its new high of ₹1,024.50. It has now surged over 44 percent from its 52-week low of ₹711.15, hit on March 14, 2024.

The recent fundraising comes just eight months after Cello World’s debut on the stock exchanges through a ₹1,900-crore initial public offering (IPO). This IPO involved the sale of shares by the company's promoters and investors via an offer for sale (OFS). ICICI Ventures had also previously invested ₹360 crore in Cello World in November 2022.

The company plans to use the funds for various purposes including repayment of debt, capital expenditure to augment its manufacturing facilities, funding its growth plans as well as for working capital requirements. Another key reason for the QIP is to reduce the promoter's stake in Cello World to 75 percent to comply with the Securities and Exchange Board of India's (SEBI) minimum public shareholding norms, sources told Moneycontrol earlier this week.

These norms require all newly listed companies to achieve a minimum public shareholding of 25 percent within three years of listing.

Cello World IPO was open for bidding between October 30, 2023, and November 1, 2023. The shares were listed on BSE, and NSE on November 6, 2023. Cello World's IPO price band was set in the range of ₹617 to ₹648 per share. The stock already has surged over 58 percent from its issue price of ₹648.

Meanwhile, in 2024 YTD, it has gained over 30 percent. The stock has jumped almost 13 percent in just 4 sessions of July, following a 4 percent rise in June. However, it lost 6.4 percent in May. Before that, the scrip rallied 17 percent in April after a 9.3 percent fall in March. The first 2 months were in the green for the stock, up 1 percent in February and 7.4 percent in January.

Cello World is one of the leading companies in the consumer ware market in India, with a presence in consumer houseware, writing instruments and stationery, and molded furniture and allied products categories.

Recently, brokerage house JM Financial initiated coverage on Cello World with a 'buy' recommendation and set a target price of ₹950 per share, valuing the company at 40 times the projected FY26 EPS. The brokerage predicts that Cello will achieve a CAGR of 16 percent in revenue, 21 percent in EBITDA, and 24 percent in PAT from FY23 to FY26, with median RoIC and RoE of 26 percent and 30 percent, respectively, during this period. It believes Cello is well-positioned to capitalise on growth in consumer ware, writing instruments, and molded plastics due to its superior growth track record compared to peers.

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