Analysts expect Cello World shares to open somewhere between Rs 790 and Rs 810, compared to the IPO price of Rs 648
According to analysts, Cello World shares could list on the stock exchanges on November 6th at a premium of 22 to 25 percent. The issue received strong response from investors and analysts now expect the stock to open at between Rs 790 and Rs 810 against the offer price of Rs 648.
On the gray market, the share achieved a premium of 24 percent. The gray market is an unofficial trading platform where shares are traded well before allotment at the IPO and up to the listing day. Most investors track a stock’s gray market premium (GMP) to get an idea of the stock market price.
“The subscription was in line with our estimate given the company’s strong fundamentals and high-growth industry dynamics. Analyzing the valuation, it appears that the issue was appropriately priced reflecting expected revenue and profit growth,” said Prashanth Tapse, Sr. VP Research at Mehta Equities.
Also read: Cello World IPO: 10 things you should know
The public edition of Cello World received 38.9 subscriptions. Qualified institutional buyers (QIB) bought 108.57 times the allocated quota, high net worth individuals (HNI) bought 24.42 times and retail investors bid 3.06 times. The price band for the IPO, which began on October 30 and ended on November 1, was set at Rs 617-648 per share.
Given the changed market dynamics after the US Federal Reserve meeting, Tapse expects a significant stock market increase of around 22 to 25 percent compared to the issue price. “We strongly believe that Cello World’s IPO offers a long-term opportunity to allotted investors and therefore recommend all allotted investors to hold for the long term while those who have not received allotments can accumulate their shares on the listing day,” said Tapse.
The Mumbai-based company raised Rs 1,900 crore through a maiden public issue that consisted of only an offer for sale (OFS) from the promoters. Since there was no new issue component to the offer, all of the money, except for the issue costs, went to the organizers. However, the main aim of the offer was to take advantage of the benefits of listing the shares on the stock exchange.
Parth Shah, Research Analyst at StoxBox, believes the stock rose on the back of sustained revenue and PAT growth, which rose at a CAGR of 30.8 per cent and 31.2 per cent respectively in FY21-23, and a strong ROCE will open at a premium of about 25 percent from 44.5 percent in FY23.
Also read: IPO Weekly Wrap: Mamaearth, ESAF, Cello, Blue Jet and 12 SMEs steer the market ship
“We remain confident that the issue will open at a premium and recommend investors who have received an allotment to book profits on the opening day and consider buying after seeing the financial performance over the medium term,” Shah said .
Cello World has a strong presence in consumer homeware, writing instruments and stationery, molded furniture and related products, and consumer glassware categories. The company, which offered 15,891 stock keeping units (SKUs) across its product categories as of June 2023, operates 13 manufacturing facilities across five locations and is setting up a glassware manufacturing facility in Rajasthan.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com recommends users to check with certified experts before making any investment decisions.
Yash Sadhak Shrivastava is an emerging voice at the forefront of journalism with experience covering financial markets and geopolitics.
Discover latest business news, Sensex and Nifty updates. Get personal finance insights, tax questions and expert opinions on Moneycontrol or download the Moneycontrol app to stay up to date!
Comments are closed.