Cello World — Q1 FY26 earnings call

Call held 13 Aug 2025

Management summary

Cello World reported a modest start to FY26 with 6% revenue growth, navigating a challenging environment marked by early monsoons and sluggish consumer demand. While the Consumerware segment showed resilience, the Writing Instruments and Furniture businesses faced headwinds. Profitability is currently impacted by the ramp-up of the new glassware plant and increased competitive discounting, leading to a downward revision in full-year margin guidance.

Highlights

  • Revenue grew 6% YoY to ₹529 crores, led by 12% growth in the Consumerware segment.

  • Achieved highest-ever Gross Profit Margin of 54%, though EBITDA margin compressed to 24%.

  • Glassware business delivered 50% growth, though the new Falna facility remains a drag on profitability during ramp-up.

  • Writing Instruments segment revenue declined to ₹74 crores from ₹83 crores YoY due to export and domestic slowdowns.

  • Management lowered full-year EBITDA margin guidance to ~23% (from 26% in FY25) citing competitive intensity and startup costs.

  • Total FY26 Capex planned at ₹100 crores, including ₹40-50 crores for a new steel flask facility starting in Q3.

  • General Trade remains the dominant channel at 75.8% of revenue, while Quick Commerce is seeing rapid traction.

Concerns

  • Intense Competitive Pressure

Key financials

  1. Revenue ₹529 Cr +6%YoY
  2. Gross Profit Margin 54%
  3. EBITDA Margin 24%
  4. PAT ₹73 Cr
  5. PAT Margin 14%

What they filed

Q1 FY27: revenue down 0.4%, net profit down 9.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue490 557 589 529 587 +20%554 −1%654 +11%527 −0%
EBITDA119 127 135 109 128 +8%106 −17%129 −4%99 −9%
Net profit87 92 96 81 91 +5%69 −25%90 −6%73 −10%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentGross Profit MarginRevenue MixYoY GrowthRevenue
Consumerware56%69%12%—
Writing Instruments59%—-10.8%₹74 Cr
Moulded Furniture and Allied41%17%—₹90 Cr

Guidance & targets

Revenue

  • Overall Revenue Growth Revenue · FY26 · Medium confidence 12% to 15%
    So I think overall, yes, from a company perspective, we still guide for about 12% to 15% overall

    — Gaurav Rathod, Joint Managing Director

Margin

  • EBITDA Margin Margin · FY26 · Medium confidence 23%

    Previously 26% → 23%

    I think for this year, you should look at an EBITDA margin of around 23-odd percent for the entire year.

    — Gaurav Rathod, Joint Managing Director

Capex

  • Total Annual Capex Capex · FY26 · High confidence ₹100 crores
    So it will be around INR50 crores- INR60 crores. So about INR100-odd crores for the year.

    — Gaurav Rathod, Joint Managing Director

Capacity

  • Glassware Plant Revenue Contribution Capacity · FY26 · Medium confidence ₹110-120 crores
    So for the full year basis, we are anticipating about INR110 crores to INR120 crores of sales

    — Gaurav Rathod, Joint Managing Director

  • Steel Flask Production Start Capacity · Q3 FY26 · High confidence November-December 2025
    Plus on the steel flask business, which we are going to start producing from November, December

    — Gaurav Rathod, Joint Managing Director

Risks & concerns

  • Intense Competitive Pressure

    high

    Aggressive pricing by competitors has forced Cello to increase discounts and schemes, preventing price hikes despite rising costs.

    Management acknowledged

  • Input Cost Inflation

    medium

    Energy rate hikes in Daman and rising wage costs are impacting manufacturing margins.

    Management acknowledged

  • Export Demand Slowdown

    medium

    Writing instruments exports have been lackluster, though management sees signs of recovery in July.

    Both acknowledged

  • Glassware Ramp-up Execution

    medium

    The new plant is currently at 65% efficiency; failure to reach 85% by year-end would delay breakeven.

    Analyst acknowledged

Areas of evasion (2)

  • Specific EBITDA loss figures for the new glassware plant were not disclosed directly in the call.
  • Evasive on specific market share numbers for competitors in the pen segment.

Q&A highlights

2 direct
EBITDA Margin Compression and Core Business Pressure Direct
So overall, demand has been slow, and that is why sales promotion activities have increased in terms of schemes and some discounts... our energy costs, if you see have gone up for the year because there was a rate change in Daman specifically.

Reveals that margin pressure isn't just from the new plant, but also from rising input costs and competitive discounting in the core business.

Asked by Jay Doshi, Kotak Securities

Glassware Plant Profitability and Efficiency Partial
As I had mentioned that this year is we are building capacity, and we are at about 65% efficiencies at this point of time... it will be a drag on profitability by a percentage point or so for this entire year.

Confirms the new facility is currently loss-making and will take until year-end to reach breakeven, impacting consolidated margins.

Asked by Percy Panthaki, IIFL Securities

Writing Instruments Segment Decline Direct
I think it is volume degrowth also and also a little bit of value degrowth... domestic kind of was still -- almost flattish and major degrowth was still exports.

Highlights the weakness in the high-margin Writing Instruments segment, particularly in exports, which is a key profitability driver.

Asked by Sumant Kumar, Motilal Oswal

2 min read 5 chapters

Detailed narrative

Glassware Ramp-up and Profitability Drag

The new glassware facility in Falna contributed ₹15-16 crores to revenue in Q1 but remains a drag on consolidated profitability. Currently operating at 65% efficiency, management expects this to rise to 85% over the year, targeting a breakeven by Q4 FY26. The plant is projected to generate ₹110-120 crores in revenue for the full year, with a long-term potential of ₹200-250 crores at full capacity.

Writing Instruments Face Dual Headwinds

The Writing Instruments segment saw a revenue decline to ₹74 crores from ₹83 crores YoY, driven by a slowdown in both domestic sales and exports. While Unomax remains a high-margin brand (59% segment gross margin), the overall category was described as 'disappointing' and lackluster. Management is introducing new product lines like mechanical pencils to regain traction and expects export demand to improve in the coming months.

Margin Pressures and Competitive Intensity

Despite achieving a record 54% gross margin, EBITDA margins were pressured by rising energy costs in Daman and increased wage expenses. Competitive intensity has prevented the company from taking its usual April price hikes, instead forcing higher spending on sales promotions and discounts. Consequently, management has guided for a lower full-year EBITDA margin of ~23%, compared to 26% in the previous year.

Omnichannel Strategy and Quick Commerce Traction

General trade continues to be the primary revenue driver at 75.8%, but Cello is aggressively expanding into online channels, which now contribute 10.4%. Quick commerce is specifically highlighted as a high-growth area where the company is gaining significant traction. To manage channel conflict, Cello is increasingly developing e-commerce-specific product lines that are differentiated from their offline portfolio.

Upcoming Capacity: Steel Flask Expansion

Cello is investing ₹40-50 crores in a new steel flask manufacturing facility, with production expected to commence in November or December 2025. This category is expected to have a 5x asset turn, slightly lower than the 7x seen in plastic houseware but significantly better than the 1:1 ratio in glassware. This expansion is part of a total ₹100 crore capex plan for FY26 aimed at driving double-digit growth in the latter half of the year.

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