Cello World, a consumer goods company, has received a 38% subscription rate for its initial public offer (IPO) on the first day of the issue. The non-institutional investor (NII) portion was almost fully subscribed, while the retail portion was subscribed 35% by the end of Monday. The IPO, which opened on October 30 and will close on November 1, aims to raise up to ₹1,900 crore.
The company has already raised ₹567 crore from anchor investors ahead of the IPO. However, it is important to note that this is a complete offer for sale, meaning that no proceeds from the IPO will go to the company.
According to a report by BP Equities, Cello benefits from a dominant market position due to its large off-take per retailer. The company offers a comprehensive range of products, making it advantageous for retailers to stock Cello’s products to fulfill diverse customer demands.
While Cello World has a strong position in the market, it does face certain risks. Fluctuations in raw material prices and supply chain issues are potential challenges for the company. Additionally, it does not own the trademarks for its key brands, which could impact its reputation and business.
Despite these risks, analysts believe that Cello World has a strong potential for growth. A report by Geojit highlights factors such as increasing disposable income and consumer awareness towards safety and quality as drivers for the branded consumerware market in India. The report gives Cello World a ‘Subscribe’ rating for the IPO on a long-term basis.
However, Choice Broking assigns a ‘Subscribe with Caution’ rating for the IPO due to its high pricing. The company has growth tailwinds in the sector, but caution is advised for potential investors.
Overall, Cello World’s IPO has received fair demand from both non-institutional and retail investors. The company’s dominant market position and comprehensive product range position it well for future growth in the consumer goods industry in India.
Source: BSE
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