Among the best in industry
Cello World (CELLO) is the most diversified consumerware company and one of the top players in majority of its business segments. In this report, we have analyzed CELLO’s position against key players in its fastest-growing business segment, glassware.
Since its foray into the consumer glassware segment in 2017, CELLO has quickly scaled up this business to generate revenue of INR2.8b vs. a total addressable market (TAM) of INR35b in FY23. The segment will be a key growth driver (26% CAGR over FY23-26) for the company amid evolving applications, capacity expansions in opalware and soda lime glassware, increase in SKUs, and import substitution.
Under the consumer glassware segment, opalware/soda lime glassware dominate, with TAM of ~INR14b/INR15b. While La Opala dominates the opalware category, CELLO is also catching up with recent capacity expansions in Daman. Moreover, CELLO is the only large branded player that is expanding in soda lime glassware (higher TAM), while other players are expanding in borosilicate glassware (TAM of ~INR4B).
Currently, La Opala dominates in terms of revenue growth (CAGR of 46% over FY21- 23) and margins (EBIT margin of 33% in FY23). CELLO is not far behind (36% revenue CAGR; 23% EBIT margins). With a ramp-up of its soda lime glass capacity and achieving economies of scale, CELLO will be able to narrow the gap going ahead.
CELLO is currently trading at 34x FY26E EPS with RoE/RoCE of 32%/39% in FY26E. We believe that the company will be able to successfully scale up new businesses and expand SKUs and distribution reach in order to evolve as a leading brand in the respective segments. We reiterate our BUY rating with a TP of INR1,100 (premised on 45x FY26E EPS)
Valuation and view
CELLO has been one of the leading players across its product categories, boasting a strong brand reputation and distribution reach. With its strong manufacturing background and brand equity, CELLO has been able to quickly scale up new businesses and compete with market leaders.
The consumer glassware segment will be a key growth segment for the company and we believe CELLO will be able to surpass the market leader in the segment on back of operationalization of its new glassware capacity.
We estimate CELLO to deliver a CAGR of 18%/23%/25% in revenue/EBITDA/adj. PAT over FY23-26.
CELLO is currently trading at 34x FY26E EPS with RoE/RoCE of 32%/39% in FY26E. We reiterate our BUY rating with a TP of INR1,100 (premised on 45x FY26E EPS).
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