Cello set for recovery as Falna plant ramps up, Motilal Oswal retains 'Buy'

Cello, a leading Indian manufacturer of consumerware and writing instruments, is poised for a recovery after several quarters of subdued performance, impacted by soft domestic demand and rising costs, analysts said.

 

According to a Motilal Oswal note, the company’s new Falna glassware facility and revival in the writing instruments segment are expected to drive growth and profitability in the coming years. The brokerage has reiterated a ‘Buy’ rating on Cello stock, with a target price of ₹700, based on 32 times FY27E earnings per share (EPS).

 

“Cello has faced a challenging environment due to a consumption slowdown and geopolitical pressures affecting exports. However, with demand gradually improving and efficiency gains in its new plant, we expect performance to pick up going forward,” analysts at Motilal Oswal noted.

 

Meanwhile, on the bourses around 9:25 AM, Cello share was trading 1.21 per cent lower at ₹608.15 per share. In comparison, BSE Sensex was trading  0.65 per cent higher at 84,976.33 levels.  READ STOCK MARKET LIVE UPDATES TODAY

Falna plant to drive glassware growth

 

Commissioned in February 2025, Cello’s 20,000 MT Falna glassware facility has already reached ~65 per cent utilisation in the first quarter of FY26, and the brokerage expects it to rise to 70-80 per cent by year-end. The plant, built with advanced European technology including German furnaces and Italian press-and-blow systems, aims to deliver superior precision and productivity. Despite higher initial costs and lower early efficiency, the analysts expect the glassware segment to turn profitable in the second half of FY26.

 

The company is also setting up a 2.1 MW solar plant at Falna, which should cut energy costs by around 20 per cent. Cello currently offers around 70 stock keeping units (SKUs) in premium glassware, with plans to expand to over 100 products, including decorative and coldware items. The brokerage noted that these in-house products are priced competitively with imports, positioning Cello to benefit from import substitution in India’s ₹3,500 crore glassware market. By FY27, the glassware segment is expected to generate ₹200-250 crore in revenue, further strengthening Cello’s domestic leadership.

 

Falna is emerging as a multi-product hub, with plans to expand into steelware and plasticware through an additional ₹100-120 crore capex. Even after these projects, 50 per cent of the land remains for future expansion, underscoring Cello’s long-term growth potential. The recent anti-dumping duties on imported vacuum flasks and steel vessels from China are expected to boost domestic manufacturing and favor Cello, which is partnering with Indian OEMs to localise production.  ALSO READ | Why Motilal Oswal retained 'Neutral' call on Can Fin Homes despite Q2 beat?

Writing instruments segment on recovery path

 

Cello’s writing instruments business, marketed under the Unomax brand, is also set for a broad-based recovery. The company has launched new products including mechanical pencils, art stationery, geometry boxes, and licenced kids’ products, which are gaining traction. Retail restocking and improved demand from schools and offices are expected to lift sales, while exports to the Middle East, Africa, and Latin America are anticipated to rise as global buyers diversify away from China.

 

The brokerage highlighted that this segment commands the highest gross margins of 57-59 per cent, adding both profitability and portfolio diversification. Improved international distribution, consistent quality, and competitive pricing further support the growth outlook.  ALSO READ | 3 reasons why Axis Securities slashed IndiaMART Intermesh target price

Cello Valuation & Stock outlook

 

Motilal Oswal expects Cello to deliver a compound annual growth rate (CAGR) of 15 per cent in revenue, 17 per cent in Ebitda, and 18 per cent in adjusted PAT over FY25-28. The stock is currently trading at 27x FY27E EPS, with return on equity (RoE)/return on capital employed (RoCE) of 18 per cent/19 per cent, making it an attractive proposition for investors. 

 

“With the ramp-up of the Falna plant and revival in writing instruments, Cello is positioned for a meaningful turnaround,” the brokerage said, reaffirming the ‘Buy’ recommendation with a ₹700 target price.