Kotak Institutional Equities initiates coverage on Cello World with 'add', expects 17% upside

Analysts at Kotak Institutional Equities initiated coverage on Cello World stock with an "add" rating with a target price of Rs 950 a share, implying an upside of 17 percent from the current market price.

They expect the Indian consumer-ware market to record about 10 percent CAGR over FY24-27E.

At 12.07 pm, the stock was trading at Rs 804.25 on the National Stock Exchange (NSE), down 1.16 percent from the previous close. The stock has declined 7 percent in the past month against a 1.8 percent rise in the benchmark Sensex.

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Analysts at Kotak expect Cello World to register 15 percent/18 percent/17 percent revenue /EBITDA/PAT CAGRs over FY24-27E. "We like Cello’s diversified portfolio, growth opportunities and financial discipline. The consistent delivery of low-to-mid teen earnings CAGR, portfolio augmentation through organic and inorganic route, and improvement in the working capital cycle could drive further re-rating," the brokerage firm said.

Since Cello enjoys 7 percent/2 percent/5 percent share in consumer houseware, writing instruments and stationery, and moulded furniture, analysts expect the company to lead the charge in the formalisation of
the large unorganised and fragmented consumerware market.

Cello is a leading consumerware company in India, with a diversified product portfolio spanning across consumer houseware/glassware, stationery and molded furniture categories. Cello and Milton are the top-two brands that feature among consumer’s top-of-mind recall and consideration set.

In the December quarter, Cello World posted a total income of Rs 531.5 crore and net profit after tax of Rs 90.6 crore.

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