Cello World — Q2 FY26 earnings call

Call held 12 Nov 2025

Management summary

Cello World delivered a strong Q2 with 20% revenue growth, driven by festive demand and the scaling of its glassware business. The strategic re-acquisition of the 'Cello' brand for writing instruments is a major highlight, expected to drive significant growth in FY27. While steel supply constraints and initial glassware costs pressured gross margins, the company remains on track for double-digit annual growth and healthy EBITDA margins.

Highlights

  • Revenue grew 20% YoY to ₹587.4 crores in Q2 FY26; H1 revenue crossed ₹1,000 crores for the first time at ₹1,116.5 crores.

  • EBITDA margin stood at 24% (₹141.3 crores) for the quarter; management guided for 22-23% operational EBITDA margin for the full year.

  • Acquired the 'Cello' brand for writing instruments and stationery via a lease agreement with the promoter group (CPIW) following BIC's exit from India.

  • Glassware plant achieved breakeven in Q2 with 60% utilization; management expects 'good margins' once utilization hits 70-75%.

  • Steel category faced a decline due to supply constraints; a new dedicated steel plant is set to commence production in December 2025.

  • Writing instruments segment grew 16% YoY to ₹81 crores, with gross margins leading at 55%.

  • Capex guidance of ₹150 crores for FY26, including ₹75 crores for the steel plant expansion.

Key financials

  1. Revenue ₹587.4 Cr +20%YoY
  2. EBITDA ₹141.3 Cr
  3. EBITDA Margin 24%
  4. PAT ₹85.7 Cr
  5. Cash Flow from Operations ₹130.8 Cr

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 MarginYoY GrowthRevenue
Consumerware50.2%23%—
Writing Instruments55%16%₹81 Cr
Moulded Furniture & Allied40.9%8%₹84 Cr

Guidance & targets

Revenue

  • Full Year Revenue Growth Revenue · FY26 · High confidence 12% to 15%
    So I think we are on track to achieve this 12% to 15% and for the year. If this kind of momentum continues, which we have seen in the last quarter, we should reach there pretty easily.

    — Gaurav Rathod, Joint Managing Director

Margin

  • Operational EBITDA Margin Margin · FY26 · High confidence 22% to 23%
    So I think we want to be in the 22%, 23% range is without the other income portion of it, I think operational income is what I'm talking about.

    — Gaurav Rathod, Joint Managing Director

Capex

  • Total Capex Capex · FY26 · High confidence ₹150 crores
    Yes. So, I think this year would be a capex of about 150 crores around. That includes, of course, the steel plant expansion, which is close to about INR75-odd crores with land and building.

    — Gaurav Rathod, Joint Managing Director

  • Maintenance Capex Capex · FY27 · Medium confidence ₹75 crores
    Going forward, this will be -- I think next year, it should be around INR75-odd maintenance.

    — Gaurav Rathod, Joint Managing Director

Capacity

  • Glassware Plant Utilization for Good Margins Capacity · FY26 · Medium confidence 70% to 75%
    So, I think at about 70%, 75%, we will start looking at good margins coming in.

    — Gaurav Rathod, Joint Managing Director

Risks & concerns

  • Chinese Dumping Pressure

    medium

    Active dumping from Chinese suppliers in the glassware segment is being countered by scaling production and market share gains.

    Management acknowledged

  • Steel Supply Constraints

    medium

    Shortage of supply due to import restrictions forced reliance on higher-cost domestic OEMs, impacting margins.

    Management acknowledged

  • Potential US Tariffs

    low

    Management noted they haven't been hit by US tariffs yet, but it remains a watch item for the export business.

    Management acknowledged

Areas of evasion (1)

  • Specific revenue contribution of the Opalware division (declined to give separate category numbers).

Q&A highlights

3 direct
Cello Brand Acquisition Structure Direct
So basically, for us, we are basically entering into an agreement with BIC for the pen brand itself... acquired by CPIW, which will be then leased to Cello World in a separate subsidiary... there is no royalty post that and it will be leasing it out to Cello World at no additional cost.

Clarifies that the brand acquisition is royalty-free for the listed entity, removing concerns about related-party leakage.

Asked by Aniruddha Joshi, ICICI Securities

Gross Margin Contraction in Consumerware Direct
One is that the glass plant -- the glass sales are higher, which is from the new plant, which currently has higher costs... Second is also the steel ware... which there is a contraction of gross margin there for the moment... And the third is discounts.

Explains the temporary nature of margin pressure due to new plant ramp-up and supply chain shifts in the steel category.

Asked by Jay Doshi, Kotak

Opalware Capacity Expansion Direct
So, in the Opalware, we're about close to about 85% utilization levels... we will try to first utilize 100%. That will be our first priority. And post that... we are open to expanding this capacity going forward.

Indicates that the core Opalware business is nearing full capacity, signaling potential for future growth-led capex.

Asked by Rahul Dani, Monarch Networth Capital

2 min read 5 chapters

Detailed narrative

Strategic Return of the 'Cello' Brand

Cello World is re-entering the writing instruments and stationery market with its namesake brand after BIC's exit from India. The brand will be acquired by the promoter group (CPIW) and leased to Cello World at no additional cost or royalty. Management expects this to be a significant growth driver, aiming to reach Unomax-level profitability (approx. 25% margins) within 12 to 18 months. The company already has 30-35% spare capacity in its Unomax facility to accommodate this expansion.

Glassware Plant Reaches Critical Breakeven

The glassware plant achieved breakeven in Q2 FY26 with a utilization level of approximately 60%. While current high costs associated with the new plant and Chinese dumping pressure have weighed on margins, management expects a significant margin uplift once utilization reaches the 70-75% range. The company plans to expand its SKU count in this vertical from 110 to 150 to gain further market share.

Steel Category Transition to In-House Manufacturing

The steel category experienced a decline this quarter due to supply constraints and the inability to import, forcing the company to source from domestic OEMs at higher costs. To resolve this, a new steel plant is scheduled to commence production in December 2025. This ₹75 crore investment is expected to stabilize the supply chain within 4-5 months and improve the margin profile by substituting expensive OEM sourcing with in-house manufacturing.

Opalware and Furniture: Steady Performance

Opalware continues to perform well with utilization at 85% and double-digit growth, though management is cautious about adding new furnace capacity until 100% utilization is reached. The moulded furniture business grew 8% YoY to ₹84 crores, with a focus on premiumization and outdoor furniture to improve EBIT margins, despite management acknowledging limited overall revenue growth potential in this mature category.

Financial Outlook and Working Capital Efficiency

The company is maintaining its guidance for 12-15% revenue growth and 22-23% operational EBITDA margins for FY26. Working capital is improving, with inventory on a downward trend and better collection cycles observed in October. Cash flow from operations for H1 stood at ₹130.8 crores, and the company maintains a healthy net cash position to fund its ₹150 crore FY26 capex plan.

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