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Cello World — Q4 FY26 earnings call

Call held 29 May 2026

Management summary

Cello World delivered its highest-ever quarterly revenue in Q4 FY26, with strong performance in writing instruments and overall FY26 revenue growth of 8.8%. However, profitability was impacted by breakeven glassware operations, subdued hydration sales, and higher input costs. The company anticipates a challenging Q1 FY27 but expects overall improvement driven by capacity ramp-ups and strategic initiatives, targeting 10-12% revenue growth and a 2-2.5% EBITDA margin improvement for FY27.

Highlights

Q4 FY26 revenue of INR 653.6 crores, up 11% YoY, is the highest-ever quarterly revenue.
FY26 revenue of INR 2,323.7 crores, up 8.8% YoY, demonstrating consistent growth.
Writing instruments segment showed robust growth of 64% YoY in Q4, reaching INR 128 crores, driven by exports and new premium products.
E-commerce and quick commerce channels significantly increased their contribution, now representing nearly 17% of overall revenue.
Successful commissioning of 2 steel bottle manufacturing lines in Q4 FY26, with 4 more in Q1 FY27, supporting future growth.

Concerns

Glassware segment remains at breakeven levels with 60% utilization, primarily due to dumping of imported glass products from China.
Hydration segment was subdued due to stock-outs in insulated steel products.
Moulded furniture business recorded a 13.5% YoY decline in Q4, reflecting prevailing industry trends and subdued demand.
Q1 FY27 is expected to be challenging due to rising raw material costs, labor issues, and overall subdued demand.
Gross margin compression in Q4 for consumerware and writing instruments due to higher costs (steel ware OEMs) and product mix shifts.

Key financials

2 periods

Q4 FY26

Revenue
₹653.6 Cr
YoY +11%
EBITDA
₹136.6 Cr
EBITDA Margin
20.9%
PAT
₹90.1 Cr
PAT Margin
13.8%

FY26

Revenue
₹2,323.7 Cr
YoY +8.8%
EBITDA
₹526.4 Cr
EBITDA Margin
22.7%
PAT
₹331.5 Cr
PAT Margin
14.3%
Cash Flow from Operations
₹255.1 Cr
Debt-to-Equity Ratio
1%

What they filed

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

₹ Cr · quarterly

Line item	Q2 FY25	Q3 FY25	Q4 FY25	Q1 FY26	Q2 FY26	Q3 FY26	Q4 FY26	Q1 FY27
Revenue	490	557	589	529	587 +20%	554 −1%	654 +11%	527 −0%
Expenses	371	430	454	420	460	448	525	428
EBITDA	119	127	135	109	128 +8%	106 −17%	129 −4%	99 −9%
Margin	24%	23%	23%	21%	22%	19%	20%	19%
Other income	13	12	13	17	14	9	8	18
Interest	0	0	0	0	0	1	0	1
Depreciation	15	15	18	19	20	20	20	22
Profit before tax	117	124	130	108	121 +3%	94 −24%	116 −11%	95 −12%
Tax rate	26%	26%	26%	25%	25%	26%	23%	22%
Net profit	87	92	96	81	91 +5%	69 −25%	90 −6%	73 −10%
EPS	3.70	3.91	3.99	3.31	3.88	2.88	4.08	3.32

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

Segment	Revenue Contribution	Gross Profit Margin
Consumerware (Q4 FY26)	66.4%	47.8%
Writing Instrument (Q4 FY26)	19.6%	47.8%
Moulded Furniture & Allied Products (Q4 FY26)	14%	39.5%

Capital allocation

high confidence

Capex ₹100 Cr
- Maintenance capex
- Steel ware and building ₹30 Cr
Capex incurred during the year stood at around INR219 crores, which mainly includes investment for the setting of manufacturing line for steel bottle as well as other select consumerware product, writing instrument and some portion spent for the maintenance capex. Going ahead for financial year FY27, we expect to do a capex of around INR100 crores. Lastly, I would like to inform that composite scheme of arrangement among Wimplast, Cello Consumer Products Limited and the company has become effective from 27th May 2026, with an appointed date of 1st April 2025 as defined under the scheme.
Debt Debt disclosed

Debt-to-equity ratio stands at 0.01%.
M&A Wimplast Limited and Cello Consumer Products Limited Merger · Closed

To explore synergies between consumerware and moulded furniture.

composite scheme of arrangement among Wimplast, Cello Consumer Products Limited and the company has become effective from 27th May 2026, with an appointed date of 1st April 2025 as defined under the scheme.
Liquidity Liquidity disclosed Company is preserving cash for inorganic growth opportunities, even if it temporarily affects return ratios.

So currently, there is -- we've always also looked at inorganic ways to grow. One example was Cello pen. So we were always open to newer acquisition possibilities if they are available at a good value. So I think that is why we are preserving some cash in the company, though it might be temporarily kind of affecting our return ratios.

Guidance & targets

Revenue

Overall Revenue Growth Revenue · FY27 · Medium confidence 10% to 12%

Right. So I think for us, revenue, we are looking at about 10% to 12% revenue growth going ahead.

— Gaurav Rathod
Writing Instruments Revenue Revenue · FY27 · High confidence INR 500 crores plus

Writing instruments is emerging structurally stronger and more scalable business for Cello, and we remain confident of achieving our target of revenue of INR500 crores plus in financial year '27.

— Gaurav Rathod
Steel Bottle Lines Peak Revenue (Current Capacity) Revenue · High confidence INR 300-odd crores

So the peak revenue of our current capacity is about INR300-odd crores, though we'll continue to do some OEMs.

— Gaurav Rathod
Glassware Peak Revenue Revenue · High confidence INR 300 crores

I think we're looking at about INR300 crores of peak revenue from glassware and our peak would be about 28% to 30% EBITDA margins.

— Gaurav Rathod

Profitability

Overall EBITDA Margin Improvement Profitability · FY27 · Medium confidence 2% to 2.5% more

Also, in terms of our margins, we are trying to scale up to about 2% to 2.5% more EBITDA margins than we currently have.

— Gaurav Rathod

Capacity

Steel Bottle Production Ramp-up Capacity · July onwards · High confidence Full production

This will start being fully achieved from July onwards. So from July onwards, you will see full production.

— Gaurav Rathod

Margin

Glassware Peak EBITDA Margin Margin · High confidence 28% to 30%

I think we're looking at about INR300 crores of peak revenue from glassware and our peak would be about 28% to 30% EBITDA margins.

— Gaurav Rathod

Working Capital

Debtor Days Reduction Working Capital · FY27 · Medium confidence 10 to 15 days lesser (target <100 days)

But we are wishing to have about 10 to 15 days lesser than what we are at today, which we are confident that we'll be able to achieve over this financial year.

— Gaurav Rathod

What to watch in Q1 FY27

Steel Bottle Production Ramp-up

Q1 and Q2 FY27

Current 2 lines operational in Q4 FY26, 4 more in Q1 FY27

Target Full production from July onwards

Why it matters

Key driver for revenue growth and margin improvement in the Hydration segment, crucial for achieving peak revenue potential.

We expect 2 more lines to commission shortly and a gradual ramp-up in overall steel bottle production is anticipated over Q1 and Q2 of financial year '27.

Risks & concerns

Middle East Situation
high

Q1 FY27 looks challenging due to the Middle East situation, impacting overall market conditions.

Management acknowledged
Raw Material Cost Inflation
high

Rising plastic raw material costs, energy costs, and overall production costs are creating headwinds.

Management acknowledged
Subdued Demand
high

The demand environment remained dynamic and moderated in H2 FY26, leading to subdued demand conditions for Q1 FY27.

Management acknowledged
Dumping of Imported Glass Products from China
medium

Impacting glassware segment's utilization (60%) and keeping it at breakeven levels, with active engagement with authorities for protection.

Management acknowledged
Heightened Competition in Opalware
medium

Increased competition and new capacity in the market are leading to a cautious approach to expansion in Opalware.

Management acknowledged
Channel Inventory and Caution
medium

Channel is buying cautiously due to steep price rises, impacting sales velocity.

Management acknowledged

Q&A highlights

8 direct

Steel manufacturing capacity ramp-up timeline and revenue impact Direct

So basically, the steel has not been delayed. It is always, as mentioned that it is starting in phases. So it has already begun in Q4 of '26, but the ramp-up is happening. So there were 2 lines that started in the last quarter. And now in this quarter, there will be another 4 lines and then another 2 lines. So that's how the phase wise it is going to start. So marginally revenue will start coming from these lines. So by July we should be in complete -- full scale mode.

Clarified that steel capacity expansion is on track with phased ramp-up, not delayed, and provided a timeline for full production, addressing concerns about revenue impact.

Asked by Manan Goyal

Strategic levers for FY27 amidst raw material volatility and competition Direct

So basically, we are quite diversified. If you look at our portfolio, it's anyway, we are across materials of glass, plastic, steel, but the current crisis or the overall situation has affected everything. So it's not just a particular raw material that has been affected, every segment has been affected by these crisis that is going on currently. So I think while we try to shield ourselves by a diversified portfolio, we always try to launch newer products within our category.

Management outlined its strategy of diversification across materials and continuous new product launches within categories to mitigate risks from raw material volatility and maintain brand leadership.

Asked by Sucrit Patil

Opalware business utilization and expansion strategy Direct

So, on the Opalware side, I think they are about at 85% utilization today. So, we hardly have about 15% that is left. And I think our strategy is to exhaust this capacity over this year. Also, there has been increased competition in this space. So we are trading a little cautiously here, while so maybe in some time, we would look at expanding our capacity. But at this point of time, because of heightened competition and more capacity that have come in the market, we first want to exhaust our current capacity and then move ahead.

Revealed high current utilization (85%) but a cautious approach to further expansion due to increased competition, prioritizing existing capacity utilization.

Asked by Krupa Padya

Impact of Middle East crisis and Q1 FY27 outlook Direct

I think Q4 did not see that much of impact because the war had just started in March, and there was not much impact on prices also, it started happening in the latter half of March. But I think, yes, Q1 looks a little challenging. So we are trading very cautiously because we have been impacted. I think most companies have been impacted by all sides, whether it's rising raw material prices, labor issues, basically rising production costs, overall demand being also a little subdued. So I think, yes, there are a lot of headwinds at this point of time.

Management acknowledged that Q1 FY27 will be challenging due to various headwinds including rising costs and subdued demand, despite minimal impact in Q4 FY26 from the Middle East situation.

Asked by Vaidik Bafna

Reasons for sharp gross margin compression in Q4 for consumerware and writing instruments Direct

So consumerware, as I said, mainly glassware. So the revenues of glassware grew, but it grew without any profits. So that was reason number one. Reason number 2 is the steel ware, which we were buying from China before and then we had to switch to OEMs, which was it was more expensive to buy from them, but we couldn't increase our selling prices. So our margin compressed in both -- in steel ware as well up to the tune of about 5% to 6%.

Management provided specific reasons for margin compression, highlighting the breakeven status of glassware and increased costs in steel ware due to sourcing changes, which are critical for understanding profitability drivers.

Asked by Anu Parakh

Conservatism of 10-12% top-line guidance given price hikes and steel ware ramp-up Direct

So I think top line with the current situation, the volume growth might be lower for this month. The value growth you're completely absolutely right that in value terms, we will get growth, but in terms of volumes could be subdued for this year. As we look forward, things could improve. I hope they do, but currently, they don't look very good because of this entire prices and the subdued demand. So I think taking -- factoring that in, that is my guidance for this year.

Management clarified that the guidance accounts for potential lower volume growth due to current market conditions and subdued demand, indicating a cautious outlook despite price hikes and capacity additions.

Asked by Umang Mehta

What is needed to achieve 25% margins again Direct

So I think 2 factors which have been majorly -- which have majorly been the cause of the decline is because of the glassware because we have scaled up revenues, but there is no profit currently there. And steel ware because we lost about 5% to 6% margin due to unavailability and also due to higher trading prices that we were buying from other OEM manufacturers in India. So as we scale up both the production facilities, about 2%, 2.5% of margins will return from them. Plus as we scale up Cello pens in the stationery category, another percentage point will be added from there. So I believe this is what needs to happen for us to get back to those 26% kind of numbers.

Management clearly articulated the key drivers for margin recovery: profitability in glassware, improved margins in steel ware from in-house production, and scaling up the Cello pens business.

Asked by Rajakumar Vaidyanathan

Plans for surplus cash on the balance sheet Direct

I think a lot of this cash we are preserving also because we also look at inorganic opportunities like what we did with Cello pens. So we are always looking out for such opportunities, and we want to -- though currently, it shows our ROCEs or other return ratios as a little low. But I think in the long term, it is good for us to hold this cash for any such opportunities that are coming up.

Management indicated a strategic decision to preserve cash for future inorganic growth opportunities, prioritizing long-term strategic acquisitions over immediate return ratio optimization.

Asked by Rajakumar Vaidyanathan

3 min read 8 chapters

Detailed narrative

Q4 FY26 Performance Highlights

Cello World achieved its highest-ever quarterly revenue in Q4 FY26, reporting INR 653.6 crores, an 11% year-on-year growth. The company's EBITDA stood at INR 136.6 crores, translating to a margin of 20.9%, while Profit After Tax (PAT) was INR 90.1 crores with a margin of 13.8%. This performance was primarily driven by strong growth in writing instruments, Opalware, and glassware, despite a dynamic demand environment.

FY26 Annual Performance and Strategic Consolidation

For the full financial year 2026, Cello World recorded a revenue of INR 2,323.7 crores, growing 8.8% year-on-year. The annual EBITDA was INR 526.4 crores (22.7% margin), and PAT was INR 331.5 crores (14.3% margin). FY26 was characterized as a phase of temporary consolidation, during which the company focused on strengthening structural operations, rationalizing product portfolios, realigning distribution strategies, and enhancing operational efficiencies.

Segmental Performance and Challenges

In Q4 FY26, consumerware contributed 66.4% of total revenue with a gross profit margin of 47.8%. Writing instruments showed robust growth of 64% YoY, reaching INR 128 crores, and accounted for 19.6% of revenue, also with a 47.8% gross margin. However, the moulded furniture business experienced a 13.5% YoY decline, contributing 14% of revenue with a 39.5% gross margin, reflecting subdued industry demand.

Capacity Expansion and Utilization

Cello World commissioned two steel bottle manufacturing lines in Q4 FY26 and an additional four in Q1 FY27, with full production anticipated from July onwards. The current peak revenue potential from these steel bottle lines is estimated at INR 300 crores. Conversely, the glassware segment operates at only 60% utilization, remaining at breakeven levels due to the dumping of imported glass products from China, though it has a peak revenue potential of INR 300 crores and 28-30% EBITDA margins.

Margin Pressures and Recovery Outlook

Gross margin compression in Q4 was attributed to glassware operating at breakeven, higher costs for steel ware (due to purchasing from OEMs instead of in-house production), and a product mix shift towards lower-margin appliances. Management aims to improve overall EBITDA margins by 2-2.5% in FY27, driven by the ramp-up and profitability of steel ware and glassware, and the integration of the Cello pen business, which was previously loss-making.

Distribution Strategy and E-commerce Growth

General trade remains the dominant distribution channel, accounting for 75.4% of total sales in Q4. However, the company is actively strengthening its presence in modern digital channels, with e-commerce and quick commerce now contributing nearly 17% of overall revenue. This realignment aims to address evolving consumer preferences and expand reach into markets where physical distribution is limited.

Capital Allocation and Strategic M&A

The company incurred INR 219 crores in CAPEX during FY26, primarily for new manufacturing lines, and plans INR 100 crores for FY27, mostly for maintenance. Cello World maintains a very low debt-to-equity ratio of 0.01%. A composite scheme of arrangement involving Wimplast and Cello Consumer Products Limited became effective on May 27, 2026, with an appointed date of April 1, 2025, to explore further synergies between consumerware and moulded furniture.

Market Dynamics and FY27 Outlook

Cello World anticipates Q1 FY27 to be challenging due to ongoing headwinds such as rising raw material costs, labor issues, and subdued demand, partly influenced by the Middle East situation. Despite these challenges, management expects FY27 to be a significantly better year, targeting 10-12% revenue growth and a 2-2.5% improvement in EBITDA margins, while strategically preserving cash for future inorganic growth opportunities.

This is an AI-generated summary of a publicly available earnings call transcript.

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