Cello World — Q3 FY26 earnings call

Call held 16 Feb 2026

Management summary

Cello World reported mixed Q3 FY26 results with revenues of ₹553.7 crores and an EBITDA margin of 22.1%. The quarter was significantly impacted by stockouts in the insulated steel portfolio, leading to a 40% QoQ decline in steel revenues and a marginal decline in overall Consumerware sales. A one-time gratuity provisioning of ₹7.4 crores also affected profitability. Despite these challenges, the Writing Instruments segment showed 11% YoY growth, and the company expects steelware and glassware to normalize and contribute to higher growth and margins in the coming quarters.

Highlights

  • Writing Instruments segment reported a top line of ₹86 crores, delivering an 11% year-on-year growth.

  • The Cello brand acquisition is expected to significantly boost Writing Instruments revenue, targeting north of ₹500 crores in FY27 and ₹1,000 crores over the next 2 years.

  • Glassware business is currently operating at approximately 60% utilization, with revenues ramping up.

  • Digital channel revenues now constitute about 15.7% of total revenues, showing meaningful traction.

  • Opalware utilization is strong at about 85%.

Concerns

  • Revenue of ₹553.7 crores, with demand softening meaningfully in December, making it a relatively weaker December.

  • EBITDA margin of 22.1% was impacted by lower production volumes and suboptimal absorption of fixed costs in steel.

  • A one-time exceptional impact of ₹7.4 crores was incurred due to gratuity provisioning pursuant to new labour codes.

  • Consumerware segment recorded a marginal decline in sales, primarily due to ~40% quarter-on-quarter decline in steel revenues caused by stockouts.

  • Molded furniture category witnessed a 10.6% decline compared to Q3 FY25 due to weak polymer prices and unreflected government orders.

Key financials

2 periods

Headline

  • Revenue
    ₹553.7 Cr
  • EBITDA
    ₹122.3 Cr
  • EBITDA Margin
    22.1%
  • PAT
    ₹63.6 Cr
  • PAT Margin
    11.5%

9M

  • FY26 Revenue
    ₹1,670.1 Cr
    YoY +8%
  • FY26 EBITDA Margin
    23.3%
  • FY26 PAT
    ₹222.3 Cr
  • FY26 PAT Margin
    13.3%

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

SegmentRevenue ContributionGross Profit Margin
Consumerware69.5%50.2%
Writing Instruments15.5%56.7%
Molded Furniture and Allied Products15%39.6%

Capital allocation

high confidence
  • Capex ₹150 Cr
    • Insulated steel bottle manufacturing plant (Rajasthan)
    • Maintenance capex ₹75 Cr
    • Writing instruments capex ₹50 Cr
    • Potential opalware greenfield project ₹100 Cr
    We have commissioned a state-of-the-art fully integrated insulated steel bottle manufacturing plant in Rajasthan. Two production lines are currently operational with the remaining lines to be commissioned in phases through H1 of financial year '27. (Gaurav Rathod, Page 4) ... capex of about INR100 crores, INR110 crores is what we look at if we are going to be ever doing it this year. (Gaurav Rathod, Page 8) ... INR150 crores for this year and INR75 crores for next year or anything incremental could be seen... (Karan Bhatelia, Page 13) ... So maintenance capex is going to be at about INR75-odd crores – INR75 crores to INR 100 crores. Apart from that, there will be slight capex in the writing instruments. (Gaurav Rathod, Page 13) ... Right. So correct to assume INR150 crores for both the years, '26, '27? (Karan Bhatelia, Page 13) ... Maximum, yes, maximum. That is the upper limit. (Gaurav Rathod, Page 14)
  • M&A Cello brand (Writing Instruments) Acquisition · Integrated

    To boost writing instruments segment revenue and expand product portfolio.

    Cello World was only involved in the brand deal, not the asset deal, as existing facilities were sufficient.

    So basically, the brand was bought by CPIW, which is a promoter group entity and all the brand is housed there. And even the Cello brand has been housed there. So CPIW paid for the brand. So it was there were 2 deals that had happened. One was the brand deal and one was the asset deal. So we were only involved in the brand deal. The assets were bought by a separate company altogether. So that is why there is no impact because we already had our current facilities had enough capacities to produce the goods that Cello was selling.
  • M&A Wim Plast Merger · Pending regulatory

    Strategic consolidation.

    Appointed date is April 1, 2025. Expected to be completed by Q1 FY27.

    See, in the month of Feb only final hearing is there -- is around last week of Feb. And thereafter, once we get the approval, then everything is set, then we will be in the process of merging the thing. I mean already, as you know, appointed date is 1st April 2025. So definitely, it will be from that date itself. But maybe around 2, 3 months' time, we will see all that get through. (Atul Parolia, Page 14) ... So by first quarter -- in the first quarter of FY '27, we should be done with this? (Deepesh J. Sancheti, Page 14) ... Yes for sure. (Gaurav Rathod, Page 14)

Guidance & targets

Overall Growth

  • Overall Revenue Growth Overall Growth · next couple of quarters · Medium confidence 8-10%
    We remain confident of delivering about 8% to 10% overall growth, supported by the steelware ramp-up and glassware scaling in the next couple of quarters.

    — Gaurav Rathod

Profitability

  • EBITDA Margin Profitability · next two quarters · Medium confidence 22%
    As steel volumes normalize, we expect margins to revert to our normalized 22% EBIT over the next two quarters.

    — Gaurav Rathod

Writing Instruments

  • Combined Revenues (Unomax and Cello) Writing Instruments · FY27 · High confidence north of ₹500 crores
    In financial year '27, we expect combined revenues north of INR500 crores with the Unomax and Cello brand combined.

    — Gaurav Rathod

  • Combined Revenues (Unomax and Cello) Writing Instruments · next 2 years · Medium confidence about ₹1,000 crores
    And the scalability of this -- both brands put together in the next few years is immense, and we are looking at a top line of about INR1,000 crores over the next 2 years.

    — Gaurav Rathod

Molded Furniture

  • Growth Molded Furniture · ongoing · Medium confidence low single-digit
    So I think this will continue to be a trend in Wim Plast, and that is why we have always guided for a low single-digit number growth in the Wim Plast side.

    — Gaurav Rathod

Premiumization

  • Mix of Premium Products Premiumization · Over time · Low confidence 20%

    From 7-8% today

    We have kind of increased the mix to about 7% to 8%. Over time, this, we want to take it to about 20%.

    — Gaurav Rathod

Capex

  • Total Capex Capex · FY26 and FY27 combined · High confidence ₹150 crores
    Right. So correct to assume INR150 crores for both the years, '26, '27? ... Maximum, yes, maximum. That is the upper limit.

    — Gaurav Rathod

Glassware

  • Opalware Peak Revenue Glassware · at its peak · Medium confidence ₹400-410 crores
    So opalware at its peak can do about INR400 crores to INR410 crores of revenue at its peak.

    — Gaurav Rathod

Steelware

  • Steel Current Capacity Steelware · with additional capex · Medium confidence ₹300 crores
    Steel current capacity will go up to about INR300 crores with additional capex, which is not a lot.

    — Gaurav Rathod

What to watch in Q4 FY26

Steelware revenue normalization

next couple of quarters
Current 40% QoQ decline in steel revenues (Q3 FY26)
Target Return to normal revenue levels

Why it matters

Recovery of the steelware segment is crucial for Consumerware growth and overall revenue/margin improvement.

We expect the steel business to progressively ramp up and return to normal revenue levels over the next couple of quarters.

Risks & concerns

  • Steelware stockouts and supply issues

    high

    Led to a 40% QoQ decline in steel revenues, impacting Consumerware sales and overall margins.

    Management acknowledged

  • Weak polymer prices

    medium

    Directly impacted the molded furniture category, contributing to a 10.6% decline.

    Management acknowledged

  • Competition in opalware market

    medium

    New competition in the market is leading to a cautious approach on capacity expansion.

    Management acknowledged

  • New labor codes impact

    low

    Resulted in a one-time exceptional impact of ₹7.4 crores due to gratuity provisioning.

    Management acknowledged

  • Input cost fluctuations

    low

    Management believes these are generally passable to consumers and the risk is limited.

    Management downplayed

Q&A highlights

6 direct, 1 evasive
Guidance on revenue growth and EBITDA margin Partial
So basically, as per the -- this thing as I mentioned that if steelware would have contributed meaningfully in this quarter, this quarter would have been in a double-digit kind of a growth overall because our Writing Instruments segment also saw good growth. And of course, molded furniture, because of the polymer prices has a direct impact because as the polymer prices go weaker -- because 62% of the cost of molded furniture is actually polymer. So that is why there we had a slight decline.

Analyst questioned the feasibility of prior guidance given Q3 performance, leading management to explain the specific segment challenges impacting overall numbers and reiterate margin recovery timeline.

Asked by Praveen Sahay

In-house manufacturing contribution Evasive
No. It has not gone down. I don't know where you're getting that number from because it's about 72% is in-house manufacturing, and it will only go up as we ramp as we start producing more of the steelware.

Analyst's calculation of a significant drop in in-house manufacturing was directly contradicted by management, indicating a discrepancy in reported or interpreted figures.

Asked by Praveen Sahay

Opalware utilization and expansion plans Direct
So opalware is almost we are at about 85% of utilization at this point of time. ... No. Currently, at this point of time, we are not we need to first exhaust capacity to about 100%. Also, there is new competition in the market. So we are trending cautiously on that side. But yes, of course, as we near complete exhaustion of capacity, we will start thinking about it in the next few months.

Management provided clear utilization figures and a cautious stance on expansion due to market competition, outlining potential future capex for greenfield projects.

Asked by Bhavin Rupani

Glassware utilization and demand drivers Direct
No. So it's not that anything technical. The idea is that the revenues are ramping up. But of course, it takes a little time for revenues to keep going up. Every -- of course, month-on-month, we are seeing a growth in revenue of glassware. But since it will take a little time -- of course, the potential can be a lot more, as I said, from this plant.

Clarified that the sustained 60% glassware utilization is due to a gradual revenue ramp-up and existing stock, rather than technical issues or soft demand, which is important for understanding future growth trajectory.

Asked by Bhavin Rupani

Impact of steelware supply issues on growth Direct
In the Consumerware segment, we would have seen a 12% growth year-on-year. If it is even the same as last year, if revenues of steel would have stayed the same.

Management quantified the lost growth opportunity in the Consumerware segment due to steelware supply issues, providing a clearer picture of underlying demand.

Asked by Naitik

Cello pens brand deal structure Direct
So basically, the brand was bought by CPIW, which is a promoter group entity and all the brand is housed there. And even the Cello brand has been housed there. So CPIW paid for the brand. So it was there were 2 deals that had happened. One was the brand deal and one was the asset deal. So we were only involved in the brand deal. The assets were bought by a separate company altogether.

Clarified the complex deal structure of the Cello pens brand acquisition, explaining why Cello World benefits from the brand without direct payment for assets, which was a point of confusion for the analyst.

Asked by Naitik

Market share journey for steel products Direct
And the point was that the kind of diversified range that we could have, we cannot have that anymore and no one can have that anymore. So I think that is one reason that we still remain of course, we remain confident that market share gains will happen because no one now can go and import, say, a container. But having said that, the range has reduced. And to build that range will, of course, take some time.

Management explained the shift in market dynamics for steel products post-BIS regulations, indicating that while market share gains are expected, rebuilding the product range will take time.

Asked by Aniruddha

Wim Plast merger timeline Direct
See, in the month of Feb only final hearing is there -- is around last week of Feb. And thereafter, once we get the approval, then everything is set, then we will be in the process of merging the thing. I mean already, as you know, appointed date is 1st April 2025. So definitely, it will be from that date itself. But maybe around 2, 3 months' time, we will see all that get through.

Management provided a clear and specific timeline for the completion of the Wim Plast merger, which is a significant strategic event.

Asked by Deepesh J. Sancheti

2 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Cello World reported a mixed Q3 FY26, with revenues of ₹553.7 crores and an EBITDA margin of 22.1%. The quarter saw demand soften meaningfully in December. Profit after tax stood at ₹63.6 crores, translating to a PAT margin of 11.5%. Additionally, a one-time exceptional impact of ₹7.4 crores was incurred due to gratuity provisioning under new labour codes.

Consumerware Segment Challenges and Steelware Impact

The Consumerware segment, contributing 69.5% of total revenue, recorded a marginal decline in sales. This was primarily driven by significant stockouts in the insulated steel portfolio, which led to an approximate 40% quarter-on-quarter decline in steel revenues. This decline significantly impacted overall consumer revenues and temporarily affected margins due to lower production volumes and suboptimal absorption of fixed costs.

Writing Instruments Segment Growth and Cello Brand Integration

The Writing Instruments segment reported a strong performance with ₹86 crores in revenue, achieving an 11% year-on-year growth. Contributions from the recently acquired Cello brand are expected to significantly boost this segment. Management projects combined revenues for Unomax and Cello brands to exceed ₹500 crores in FY27 and reach approximately ₹1,000 crores over the next two years.

Molded Furniture and Glassware Segment Updates

The molded furniture category experienced a 10.6% decline compared to Q3 FY25, mainly due to weak polymer prices and the absence of certain government orders. Management expects low single-digit growth for this segment. The glassware business is currently operating at around 60% utilization, which is expected to continue for the next two quarters. Profitability for glassware is anticipated to kick in once utilization crosses 75-80%.

Capacity Expansion and Capital Expenditure

A state-of-the-art insulated steel bottle manufacturing plant in Rajasthan has been commissioned, with two production lines operational and the rest to be commissioned in H1 FY27. The company plans a total capex of ₹150 crores for FY26 and FY27 combined, which includes maintenance capex of ₹75-100 crores annually and slight capex in writing instruments. Potential opalware expansion, if undertaken, would involve ₹100-110 crores for a greenfield project.

Strategic Priorities and Channel Mix

Cello World continues to focus on portfolio rationalization using the 80-20 principle and premiumization, aiming to increase the premium product mix from the current 7-8% to 20% over time. The digital channel is gaining significant traction, with its revenues now accounting for 15.7% of the total revenues.

Wim Plast Merger Progress

The merger with Wim Plast is in its final stages, with the last hearing scheduled for February. Regulatory approval is expected within 2-3 months, and the merger is targeted for completion by Q1 FY27, with an appointed date of April 1, 2025.

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