Cello World reported mixed demand in Q3 FY26, with revenues of INR 553.7 crores and an EBITDA margin of 22.1%, impacted by stockouts in insulated steel products causing a 40% QoQ decline in steel revenues. Management remains confident in margin recovery to 22% EBIT as steel volumes normalize. Key focus areas are ramping up the new steel plant and scaling the glassware segment, projecting significant growth potential in the next two years.
Cello World Q3 FY26 Performance Overview
Cello World Limited held its Q3 FY26 Results Conference Call on February 16, 2026. Despite a mixed demand environment where October momentum softened in December, the company reported revenues of INR 553.7 crores, achieving an EBITDA margin of 22.1%. A one-time exceptional impact of INR 7.4 crores due to gratuity provisioning affected quarterly profitability.
Segment Performance and Challenges
The Consumerware segment saw a marginal sales decline, primarily driven by supply constraints in insulated steel. Stockouts led to an approximate 40% quarter-on-quarter decline in steel revenues, which heavily impacted overall Consumerware results. Management noted that without this steel impact, the quarter would have shown significant growth.
Writing Instruments & Glassware
- Writing Instruments: Reported top-line growth of 11% YoY, achieving INR 86 crores. Contribution from the newly acquired Cello brand starts this quarter, with combined revenues (Cello and Unomax) expected to exceed INR 500 crores in FY27, targeting INR 1,000 crores in the next two years.
- Glassware: Currently operating at 60% utilization, utilizing existing stock. While facing pressure from Chinese dumping, the business has reached breakeven. Management expects utilization to remain at this level for a couple of quarters before scaling up.
- Molded Furniture: Witnessed a 10.6% decline due to weak polymer prices and the non-repeat of certain government orders from the prior quarter.
Strategic Priorities and Outlook
Management emphasized portfolio rationalization using the 80-20 principle and continues to work on premiumization, aiming to increase the premium mix to about 20% over time (currently 7% to 8%). Digital revenue traction is strong, accounting for 15.7% of total revenues.
Outlook for Margins and Growth
Management confirmed that the margin softness is a temporary blip. As steel volumes normalize and the new steel plant ramps up—with two lines operational and remaining lines phased through H1 FY27—margins are expected to revert to a normalized 22% EBIT over the next two quarters.
For the coming quarters, Cello is guiding for overall growth of about 8% to 10%, constrained by the steelware pressure. Post H1 FY27, growth is expected to be substantially higher as the steel plant scales up and glassware utilizes operating leverage.
Financial Highlights (9 Months FY26)
The 9-month performance showed revenue of INR 1,670.1 crores (8% YoY growth). EBITDA stood at INR 389.8 crores (23.3% margin), with Profit After Tax at INR 222.3 crores (13.3% PAT margin).
Q&A Insights
Management confirmed that opalware utilization is at about 85%, but expansion plans are on hold until full capacity is exhausted, noting that any future expansion would likely be Greenfield. Regarding the integration of subsidiaries (like Wim Plast), Cello intends to maintain the current structure to ensure clear focus on unit economics (P&L) for each business unit.
In terms of pricing strategy, management indicated no immediate pricing corrections are planned, focusing instead on cost optimization and margin recovery in manufacturing. Glassware is viewed as a very long-term bet with an extremely high entry barrier.
Source: BSE
