Prabhudas Lilladher (PL) has reasserted its bullish outlook on Cello World, maintaining a BUY rating with a revised target price of Rs 686 as of September 30, 2025. The brokerage identifies a powerful confluence of factors driving growth: notably, the operational ramp-up at the Falna glassware facility, sectoral policy support from anti-dumping duties on certain imported products, and continuing optimization of its consumer-ware and stationery businesses. Investors are urged to focus on the company’s robust expansion strategies, superior execution capabilities, and improving financial metrics.

Investment Thesis

PL’s research continues to advocate a BUY call on Cello World, now trading at Rs570, with an upgraded target of Rs686, based on improvements in manufacturing self-reliance, financial resilience, and expansion into higher-margin verticals. Management’s decision to commission advanced production lines at the new Rajasthan plant and its efforts to capture greater shares in both domestic and export markets are being rewarded with consistent operating margin expansion and sector-beating earnings growth.

Falna Glassware Facility Fuels Growth

The recently commissioned Falna plant (Rajasthan), featuring European machinery, has started at 60% utilization, aiming for 80% by FY26, underpinning growth in the Consumerware segment. Its 70 SKUs are expected to cross 100 by next year, enabling Cello World to diversify faster and reduce dependence on overseas suppliers. The plant’s proximity to raw material vendors and a new solar installation, expected to meet 20% of power needs and lower costs by 20%, will facilitate margin accretion going forward.

Financial Trajectory and Key Projections

PL forecasts a revenue compound annual growth rate (CAGR) of 10.4% and profit after tax (PAT) CAGR of 12.5% for FY25–FY28, with improving EBITDA margins (22.7–24.1%) and ROCE hovering around 20–22% over the forecast horizon. Cello World’s consumerware vertical will remain the principal growth driver, contributing 68% in FY26, with notable pick-up in writing instruments and allied products. The company’s disciplined capital structure, with zero long-term debt, supports aggressive organic growth targets.

Operational Levers and Margin Expansion

Superior localization, anti-dumping duties (ADD) on Chinese imports, and a strategic push into steel bottle and plasticware production bolster Cello World’s competitive positioning. ADD on vacuum insulated flasks and other stainless steel vessels is forcing a pivot from reliance on imports, offering Cello a chance to further solidify market leadership by forming alliances with domestic OEMs. Initiatives to moderate working capital—through inventory normalization, faster collections, and creditor day optimization—are expected to boost free cash flow in subsequent quarters.

Valuation, Target Levels, and Investor Guidance

PL assigns a sum-of-the-parts (SOTP) valuation to CELLO, deriving a target price of Rs686 (implying 33x FY27E PE). At current levels (Rs570), the stock offers a compelling entry for medium-term investors looking for sectoral outperformers. Upside will be supported by the seamless ramp-up of multi-product facilities, enhanced capacity utilization, and continuing export momentum.

Below is a breakdown of historical and forecasted key metrics for reference:

Growth Drivers and Strategic Initiatives

Celoo World’s ongoing capex cycle incorporates a Rs2.6bn investment in glass, with incremental lines planned for steel bottles and plasticware and a further capex outlay of Rs1.12bn. Advanced automation and backward integration in key product categories will act as significant differentiators. The newly applied ADD is shifting industry economics, incentivizing local production and providing organized players like Cello a potent advantage.

Risks and Monitoring Factors

Key risks include capacity ramp-up delays, demand shocks in consumerware, and persistent working capital inflation. An unexpected reversal of sector anti-dumping duties or sustained input cost escalation could pressurize profitability. Nonetheless, management’s visibility on policy, operations, and supply-chain resilience constitutes an effective hedge, according to PL’s analysts.

Bottomline for Investors

Prabhudas Lilladher’s conviction call on Cello World is underpinned by operational modernization, favorable policy tailwinds, and financial discipline, rendering it an attractive BUY at current levels with a price target of Rs686. Investors are advised to monitor quarterly utilization trends and margin evolution as key triggers for further re-rating in the stock. In the Indian consumption and manufacturing space, Cello World’s distinctive blend of scale, innovation, and execution acumen positions it firmly ahead of peers.