Cello Shares: Motilal Oswal Reiterates ‘Buy’ Call, Expects 15% Upside
The last few quarters for Cello World Ltd. have been muted due to weak demand, higher costs, and initial gestation of the Falna plant. However, we expect the overall demand to improve in both consumerware and the writing instrument segment, coupled with improving efficiency in the new glassware unit.
Current Valuations and Target Price
Cello is currently trading at 27x FY27E earnings per share with RoE/RoCE of 18%/19% in FY27E. Reiterate Buy with a target price of Rs 700 (premised on 32x FY27E EPS). This suggests that there is still significant upside potential for investors looking to buy into the stock.
Driving Factors for Growth
Several factors are expected to drive growth for Cello World Ltd. in the coming quarters. These include:
- Improving demand in the consumerware segment, which has been a significant contributor to the company’s revenues.
- Growth in the writing instrument segment, where Cello has a strong presence and is expected to benefit from increasing demand for quality writing instruments.
- Improving efficiency in the new glassware unit at Falna, which is expected to lead to better margins and profitability for the company.
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Investment Strategy
Given the expected growth in demand and improving efficiency, Cello World Ltd. could be an attractive investment opportunity for those looking to buy into the stock. However, as with any investment, it’s crucial to do your own research and consider your own risk tolerance before making a decision.
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Conclusion
In conclusion, Motilal Oswal’s reiteration of the ‘Buy’ call on Cello World Ltd. suggests that there is still significant upside potential for investors. With improving demand and efficiency, the company is well-positioned for growth in the coming quarters. As always, it’s essential for investors to stay informed and do their own research before making any investment decisions.
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