Cello World Limited Q2 FY26: Strategic Acquisitions and Operational Milestones Drive Growth

Cello World Limited, a prominent player in India's consumer products market, has reported a robust performance for the second quarter and first half of the financial year 2026. The company's Q2 FY26 results showcase significant top-line growth, driven by strong festive demand and strategic operational advancements. For the quarter ended September 30, 2025, Cello World Limited achieved a revenue of INR 587.4 crores, marking a healthy 20% year-on-year increase. This strong performance propelled the company's H1 FY26 revenues past the INR 1,000 crore milestone for the first time, reaching INR 1,116.5 crores. The company's EBITDA for Q2 FY26 stood at INR 141.3 crores, reflecting a healthy 24% margin, while Profit After Tax (PAT) was INR 85.7 crores, with a margin of 14.6%.

The consumerware segment continued to be the primary revenue driver, contributing 71.9% of the total revenue in Q2 FY26. The writing instruments segment accounted for 13.8%, and moulded furniture & allied products contributed 14.3%. This segment-wise performance highlights the diversified nature of Cello World's business, which spans across various product categories. The management noted a healthy uptake across key categories, particularly benefiting from the festive season, which drove strong sales. Despite recent GST rate changes, which had a minimal impact on the portfolio, the company's performance reflects the strength of its brand, disciplined operations, and continued focus on execution excellence.

Strategic Initiatives Driving Future Growth

A significant highlight of the quarter is the re-acquisition of the Cello brand for stationery and writing instruments. A subsidiary of Cello World Limited has entered an agreement to lease this trademark from the promoter group, allowing the company to operate the stationery and writing instruments portfolio under both the Cello and Unomax brands. This strategic move is expected to enhance operational efficiency, optimize costs, and leverage the company's established manufacturing and distribution infrastructure. The transaction is anticipated to close by November 2025, with revenues from this segment expected to commence by January 2026. Management expressed high optimism about the growth prospects of this business, noting Cello's strong brand equity.

In terms of manufacturing, the glassware plant in Falna is ramping up as planned, achieving approximately 55% utilization in Q2 FY26 and reaching breakeven. The company aims to increase utilization to 80% by Q4 FY26 and expand its glassware product portfolio from 110 to 150 SKUs. Furthermore, the new steel plant is scheduled to commence production from December 2025. This expansion is crucial for strengthening the supply chain, enhancing cost competitiveness, and improving margins, especially given the previous challenges with supply constraints and reliance on higher-cost OEM manufacturers. The opalware capacity in Daman has also been expanded, now operating at about 85% utilization, with plans to reach 100% before further significant additions. Cello World is also undertaking solar-based cost optimization initiatives to enhance operational efficiency and reduce energy costs.

Operational Performance and Market Dynamics

While the company celebrated strong overall growth, it also acknowledged specific challenges. The steel category experienced a decline in the current quarter due to supply constraints, leading to sourcing from other OEM manufacturers at higher costs, which impacted profit margins. The glassware plant, despite achieving breakeven, still faces higher costs due to its current utilization levels, affecting gross margins. Additionally, the company is navigating active dumping pressure from Chinese suppliers in the glassware market. The moulded furniture business, while showing an 8% year-on-year growth in revenue, faces limited high-revenue growth potential, prompting a strategy to premiumize products and introduce outdoor furniture to improve EBIT margins.

Cello World's extensive Pan-India distribution network, comprising over 4,000 distributors and 150,000 retailers, remains a key strength. This network, combined with 14 own manufacturing facilities, enables the company to maintain optimal inventory levels and respond effectively to market demands. The company's ability to manufacture a diverse range of products across various materials and price points positions it as a 'one-stop-shop' for consumers across all income levels.

Outlook and Investor Confidence

Looking ahead, Cello World Limited is confident in maintaining its growth trajectory. The management reiterated its guidance for double-digit revenue growth for the full year, with EBITDA margins expected to be in the range of 22% to 23%. The company projects a capital expenditure of approximately INR 150 crores for FY26, including INR 75 crores for the steel plant expansion. For FY27, maintenance capex is estimated at around INR 75 crores. The strategic acquisitions, manufacturing expansions, and focus on operational efficiencies are expected to position Cello World Limited for sustained growth and improved profitability in the coming financial year. The company's commitment to innovation, distribution expansion, and branding initiatives underscores its disciplined approach to capital allocation and market leadership.