Cello World Q4FY25: Consumerware Lifts Growth, but Margins Under Pressure
Cello World capped off FY25 with steady topline growth, driven largely by the performance of its consumerware segment. However, some margin pressures and softness in writing instruments hint at challenges that the company is actively working to address.
The Quarter in Numbers
Let’s start with the highlights:
- Revenue: ₹590 crore, up 14.9% YoY, beating estimates by ~7.4%.
- Consumerware (CW) sales: ₹400 crore, up ~24% YoY, a bright spot for the company.
- Topline growth guidance for FY26E: 12–15% – consistent with management’s earlier view.
Management’s Outlook
Despite inconsistent demand trends, Cello is aiming for:
- 10.5% earnings growth in FY26E
- 14.1% growth in FY27E
Management sees momentum in consumerware as a key driver, although the outlook for writing instruments remains subdued.
Margin & Segment Challenges
Not everything was rosy this quarter:
- Gross margins contracted 105 bps YoY to 51.9%, reflecting some pricing and cost pressures.
- EBITDA margins fell 305 bps YoY to 23%, below expectations of 25%.
- Writing Instruments (WI) segment revenue fell ~10.3% YoY to ₹78.3 crore, missing estimates by 17.7%.
Key Numbers at a Glance
| Metric | Q4FY25 Highlights |
|---|---|
Revenue | ₹590 crore (+14.9% YoY, ~7.4% beat) |
Consumerware Sales | ₹400 crore (+24% YoY) |
Gross Margin | 51.9% (↓105 bps YoY) |
EBITDA Margin | 23% (↓305 bps YoY, below est. 25%) |
Writing Instruments Sales | ₹78.3 crore (↓10.3% YoY) |
FY26E Earnings Growth | +10.5% expected |
FY27E Earnings Growth | +14.1% expected |
P/E (FY27E EPS) | 32.2x |
Revised Fair Value | ₹735 (↑ from ₹710) |
Verdict: Growth with Caution
| Particular | Details |
|---|---|
CMP | ₹623 |
Target Price | ₹735 |
Rating | BUY |
Cello World is clearly showing momentum in consumerware, which now anchors the topline. But margin pressures and writing instruments headwinds remain key watch points. At 32.2x P/E on FY27E EPS and with an upgraded Fair Value of ₹735, there’s a balanced case for staying invested.
Disclaimer & Full Report
This feature is based on a synopsis of a research report issued by Kotak Securities Limited. For the full story (and disclaimers), make sure to check out the original sources:
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