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Steady growth though margins contract

Quick Pointers:

* Consumerware up 23.7% in Q4FY25, gross margins contract by 240bps

* Writing Instruments decline due to reduction in exports sales, while domestic sales remains flat

Consumerware revenue (68.7% of total revenue) reported strong growth driven by improved performance in in-house manufactured glass drinkware products, supported by a focus on cost efficiency. Opalware products also performed well during the period. Writing Instruments revenue declined due to reduction in exports, while domestic sales remained flat. CELLO expects revenue momentum to get better with increased capacity utilization at its glassware and opalware plants. Additionally, strong demand for stainless steel products is anticipated, due to import restrictions on Chinese products. The company aims to break even in its Glassware segment by utilizing its complete capacity by FY27. We downward revise CELLO’s FY26/27E earnings by 4.2%/3.2% factoring higher input cost and estimate revenue/EBITDA/PAT CAGR of 15.2%/18.4%/22.2% for FY25-27E. We value the stock at 33x FY27 EPS and arrive at TP of Rs746 (Rs 770 earlier). Maintain ‘BUY’.

Sales grows 14.9%, PAT declines by 0.8% YoY: Revenue increased by 14.9% YoY to Rs5.9bn (PLe: Rs5.6bn). Consumerware revenue (68.7% of total revenue) increased by 23.7% YoY to Rs4.0bn. Writing Instruments revenue (13.3% of total revenue) declined 10.3% YoY to Rs783mn due to reduction in exports, while domestic sales was flat. Moulded Furniture & Allied Products (18.0% of total revenue) increased by 7.8% to Rs1.1bn. Gross margins contracted by 110bps YoY to 51.9% (PLe: 51.7%). Gross margins of Consumerware/Writing Instruments contracted by 240bps/160bps YoY to 53.4%/57.6%, while that of Moulded Furniture expanded by 410bps YoY to 41.8%. EBITDA grew by 1.4% YoY to Rs1.4bn (PLe: Rs 1.4bn). PAT decreased by 0.8% YoY to Rs882mn (PLe: Rs884mn).

Con call highlights: 1) CELLO has guided for overall revenue growth of 10–12% for FY26, with 17–18% growth in Consumerware, 10–12% in Writing Instruments, and 7–8% in Moulded Furniture & Allied Products. 2) Capacity utilization of the glassware plant stands at 55%. The company aims to increase this to 65-70% by FY26 and 100% by FY27 with revenue of Rs4.5–4.75bn in FY26. 3) Capacity utilization in the Opalware segment stands at 80%. CELLO targets to reach 100% utilization by FY26 with Rs4–4.25bn revenue in FY26. 4) The company has 5-6 months of stainless steel vacuum bottle inventory and has ordered machines for in-house production, but may face short-term stockouts. 5) The company repaid its entire debt in FY25. 6) CELLO incurred capex of Rs1.66bn in FY25, mainly towards the glassware plant, and has planned capex of Rs1bn for FY26, including a new facility of stainless steel bottle plant in Rajasthan. 7) CELLO has market share of 12-13% in stainless steel bottles, while the top 3 players account for 35-40%, with unorganized accounting for the rest. 8) CELLO plans to improve its inventory days by 8-10 days. 9) It has proposed a final dividend of Rs1.5 per share.

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