Cello World Q2 revenue rises 7.8% as EBITDA falls 4.4% YoY

Cello World Limited reported 7.8% year-on-year Q2 FY27 revenue growth to Rs 633.2 crore, but EBITDA fell 4.4% to Rs 135 crore and reported profit after tax declined 10.3% to Rs 81.9 crore, as management cited elevated polymers, fuel, gas and packaging costs.

Why did Cello World’s Q2 profit decline despite higher revenue?

Cello World’s profit declined because revenue growth and a higher gross margin did not offset operating-cost pressure. Gross profit rose 9.3% year on year to Rs 318.1 crore in Q2 FY27, and gross profit margin increased to 50.2% from 49.5% in Q2 FY26. However, EBITDA decreased to Rs 135 crore from Rs 141.3 crore, reducing the EBITDA margin by 2.7 percentage points to 21.3% from 24%.

Management attributed the pressure to higher prices for polymers, fuel, gas and packaging materials, which it linked to the West Asia conflict. It also said low-priced imports continued to pressure certain product categories in a competitive operating environment. Profit before tax fell 9% to Rs 110.4 crore from Rs 121.3 crore, while reported profit after tax, or PAT, fell to Rs 81.9 crore from Rs 91.3 crore; PAT margin declined to 12.9% from 15.5%.

The quarter’s revenue performance was ahead of the first-half growth rate. Q2 FY27 revenue rose 7.8% year on year, while H1 FY27 revenue increased 3.9% to Rs 1,159.9 crore. Management said the timing of the festive season meant that some seasonal and institutional gifting demand shifted from Q2 into Q3 FY27, affecting the reported demand mix during the quarter.

Which Cello World segments drove Q2 FY27 revenue?

Cello World’s Writing Instruments segment drove Q2 FY27 growth, with revenue increasing 69.5% year on year to Rs 137.2 crore from Rs 81 crore. Management said the growth was led by the Cello brand. The segment also increased gross profit by 58.8% to Rs 70.7 crore, compared with Rs 44.5 crore a year earlier, making it the only disclosed segment with substantial revenue growth in the quarter.

Consumer Ware remained the largest disclosed segment by revenue, but its Q2 FY27 sales declined 1.2% to Rs 417.2 crore from Rs 422.2 crore. Its gross profit still increased 2.4% to Rs 217.1 crore from Rs 212 crore. This difference between sales and gross-profit movement is consistent with the company-wide gross-margin expansion of about 70 basis points, or 0.7 percentage points, that management attributed primarily to favourable product mix.

Moulded Furniture and Allied Products reported declines in both sales and gross profit. Revenue fell 6.5% to Rs 78.8 crore in Q2 FY27, while gross profit declined 12.3% to Rs 30.3 crore. Writing Instruments added Rs 56.2 crore of revenue year on year, exceeding the combined Rs 10.5 crore revenue decline in Consumer Ware and Moulded Furniture and Allied Products.

How did Cello World’s H1 FY27 performance compare with last year?

Cello World’s H1 FY27 revenue rose 3.9% to Rs 1,159.9 crore, but EBITDA fell 5.8% to Rs 252.2 crore and PAT declined 9.7% to Rs 155.3 crore. The half-year EBITDA margin was 21.7%, down from 24% in H1 FY26, while the PAT margin narrowed to 13.4% from 15.4%. The six-month figures show that margin pressure extended beyond the Q2 FY27 result.

Gross profit increased 3.2% to Rs 594.2 crore in H1 FY27 from Rs 576.6 crore, although gross margin slipped to 51.2% from 51.6%. Profit before tax decreased 10.4% to Rs 205.1 crore from Rs 228.8 crore. Thus, the Q2 gross-margin improvement to 50.2% was not enough to reverse the modest half-year gross-margin decline, and lower operating profitability flowed through to pre-tax and reported profit.

The segment pattern over H1 FY27 also differed sharply. Writing Instruments revenue rose 61.1% to Rs 249.1 crore and its gross profit increased 49% to Rs 131 crore. Consumer Ware revenue declined 4.5% to Rs 751.9 crore, with gross profit down 3.9% to Rs 401.3 crore. Moulded Furniture and Allied Products revenue fell 8.8% to Rs 158.8 crore and gross profit declined 13.2% to Rs 61.9 crore.

What is Cello World expecting for H2 FY27?

Cello World expects business performance to improve over the coming quarters because H2 is seasonally its stronger half and part of festive demand has moved into Q3 FY27, according to management. This is a management expectation rather than a financial target. The company reported Q2 FY27 revenue growth of 7.8% and said the later festive season shifted a portion of seasonal and institutional gifting demand out of the quarter.

Management also said its in-house steel-bottle manufacturing facility in Rajasthan was progressing toward ramp-up. It expects production to scale up steadily through H2 FY27 alongside a gradual expansion of the stock-keeping unit, or SKU, portfolio. Its stated priorities include improving operational efficiency, rationalising the product portfolio, raising capacity utilisation, increasing market penetration and maintaining disciplined working-capital management.

Cello World operates 14 manufacturing facilities across six locations and reported a distribution network of more than 5,000 distributors and 180,000 retailers in India. The release said the company aims to expand distribution, branding, promotional and digital activities, manufacturing capability and production capacity. It did not provide a quantified revenue, EBITDA or PAT target for H2 FY27.

Conclusion

Cello World’s Q2 FY27 result combined higher revenue and gross profit with lower operating and reported profit. Writing Instruments added Rs 56.2 crore of revenue year on year, while Consumer Ware and Moulded Furniture and Allied Products together declined by Rs 10.5 crore. At the company level, a 2.7-percentage-point fall in EBITDA margin outweighed the 0.7-percentage-point improvement in gross margin.

The next reported development to watch is the Q3 FY27 effect of festive and institutional demand that management said shifted from Q2. Management also expects the Rajasthan steel-bottle facility to scale production through H2 FY27, but the release gives no financial contribution target. Input-cost movements in polymers, fuel, gas and packaging materials, alongside competitive pressure from low-priced imports, remain unresolved factors disclosed by the company.