Cello’s Q2 margin improves as revenue growth outpaces costs
Revenue rose 20.22% qoq, but higher tax and other income equal to 11.98% of pre-tax profit limited profit conversion.
Filed 05 Nov 2026, 19:47 IST · after market close · Cello World Ltd (CELLO)
Key takeaways
- Consolidated revenue rose 20.22% qoq while expenses grew 19.57%, lifting operating profit 23.02% and margin by 0.44 percentage points.
- Net profit increased 11.59% qoq even as the tax rate rose 3.32 percentage points, with other income contributing 11.98% of pre-tax profit.
- Operating margin at 19.24% was 7.66 percentage points above the 11.58% median for 265 reported Consumer Discretionary peers.
Price around the results
Revenue momentum returned in consolidated Q2FY27
Consolidated revenue grew 20.22% qoq, with operating profit rising faster at 23.02% because expenses increased 19.57%. Management said Writing Instruments delivered strong growth, led by the Cello brand. It also said some seasonal and institutional gifting demand shifted from Q2 to Q3 FY27 because the festive season falls later this year.
Cost growth supported margin, but tax diluted profit growth
Operating margin expanded 0.44 percentage points qoq as revenue growth outpaced expense growth. Management said input costs remained elevated because the West Asia conflict raised polymer, fuel, gas and packaging-material prices, while low-priced imports continued to pressure some categories. The company said gross margin improved 70 basis points year on year to 50.2% on a favourable product mix. Net profit growth of 11.59% lagged the 16.60% rise in pre-tax profit as the tax rate increased 3.32 percentage points to 25.81%; other income fell 26.87% qoq but still represented 11.98% of pre-tax profit.
Margin recovered qoq but remains below the earlier quarterly level
The 19.24% operating margin improved from 18.80% in Q1FY27, but remained below the 20.61% recorded in Q1FY26. It was 7.66 percentage points above the 11.58% median operating margin of 265 Consumer Discretionary peers that had reported the quarter.
Rajasthan capacity ramp is the main management focus
Management said the Rajasthan steel-bottle facility is moving towards ramp-up and that production is expected to scale steadily through H2 FY27 as the SKU portfolio expands. The company also said it plans to scale the Rajasthan glassware facility and add capacity across several product categories. Management identified operational efficiency, portfolio rationalisation, capacity utilisation, market penetration and working-capital discipline as priorities.
Results were filed after market close
Cello filed these consolidated results after market close, so there is no market reaction to assess yet. The next trading session will provide the first observable response to the quarter.
Q2FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹633 cr | ₹527 cr | +20.22% |
| Other income | ₹13 cr | ₹18 cr | -26.87% |
| Expenses | ₹511 cr | ₹428 cr | +19.57% |
| Operating profit | ₹122 cr | ₹99 cr | +23.02% |
| Operating margin (%) | 19.24% | 18.80% | — |
| Interest | ₹1 cr | ₹1 cr | -7.02% |
| Depreciation | ₹24 cr | ₹22 cr | +10.30% |
| Profit before tax | ₹110 cr | ₹95 cr | +16.60% |
| Tax | ₹29 cr | ₹21 cr | +33.87% |
| Net profit | ₹82 cr | ₹73 cr | +11.59% |
| EPS (₹) | ₹3.63 | ₹3.25 | +11.69% |
Operating margin of 19.24% compares with a Consumer Discretionary sector median of 11.58% across 265 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Writing Instruments delivered strong growth during Q2 FY27, led by the Cello brand.
- Gross margin improved approximately 70 basis points year on year to 50.2%, mainly due to a favourable product mix.
Guidance & outlook
- A portion of seasonal and institutional gifting demand shifted from Q2 to Q3 FY27 because the festive season falls later this year.
- The company expects production at its Rajasthan steel bottle facility to scale up steadily through H2 FY27.
- The company expects business performance to improve over the coming quarters, supported by festive demand shifting into Q3.
Expansion
- The in-house steel bottle manufacturing facility in Rajasthan is progressing towards its ramp-up phase.
- The company plans to gradually expand the SKU portfolio supporting production at its Rajasthan facility.
- The company plans to scale up its Rajasthan glassware facility and expand capacity across several product categories.
New initiatives
- The company is prioritising operational efficiency, product portfolio rationalisation, capacity utilisation, market penetration and working capital discipline.
Competition
- The operating environment remained competitive, with low-priced imports affecting certain product categories.
Problems & risks
- Input costs remained elevated because the West Asia conflict increased polymer, fuel, gas and packaging material prices.
- Low-priced imports continued to pressure certain product categories.
What to watch
- Whether operating margin holds above 19.24% as input costs and low-priced imports remain pressure points.
- Whether the tax rate moves from 25.81% and allows net profit growth to narrow its gap with the 16.60% qoq rise in pre-tax profit.
- Whether Q3 revenue builds on the 20.22% qoq increase after management said some festive demand shifted into Q3.