Cellecor Gadgets coming with IPO to raise upto Rs 50.77 crore

Cellecor Gadgets 

• Cellecor Gadgets is coming out with a 100% book building; initial public offering (IPO) of 55,18,800 shares of Rs 10 each in a price band Rs 87-92 per equity share.
• The issue will open for subscription on September 15, 2023 and will close on September 20, 2023.
• The shares will be listed on NSE Emerge.
• The face value of the share is Rs 10 and is priced 8.70 times of its face value on the lower side and 9.20 times on the higher side.
• Book running lead manager to the issue is Narnolia Financial Services.
• Compliance Officer for the issue is Varsha Bansal.

Profile of the company

The company is engaged in the procurement, branding, and distribution of televisions, mobile phones, Smart Wearable, mobile accessories, smart watches, and neckbands. It sells its products under its flagship brand, i.e., CELLECOR. In this area, it focus on 35 SKUs of televisions, 15 SKUs of sound systems and sound bars and 70 SKUs of mobile phones. With the goal of offering each individual advanced television services and experiences, it truly focus on people's preferences. In order to give people a convenient and user-friendly experience, it offers a wide variety of sizes of smart and conventional televisions that are fully outfitted with the GENZ Android operating system. Also, it provides the most suitable sound systems and sound bars to transform living space into a large movie theatre

It sells power banks, data cables, USB chargers, quick chargers and other items under this category, many Wireless and Standard Power banks, all types of high-strength data lines and the necessary adapters or chargers for each. More than 40 SKUs fall into this category. It is led by its Promoter, Ravi Agarwal, who has many years of direct business experience and a wealth of knowledge about the Indian electronics industry. He started this business as a sole proprietorship in 2010 and eventually created this company. Under his leadership, the company has grown from a distributor to having its own brand over the years. He has overseen the development of its business and is actively involved in the critical aspects of its business, i.e., business strategic planning, product marketing, team management, channel expertise and competitive analysis.

Proceed is being used for:

• Working capital requirements
• General corporate purposes
• Issue expenses

Industry overview

The India Mobile Accessories market is anticipated to register an impressive CAGR during the forecast period. The market is driven by the increasing number of smartphone users, rising internet penetration, and product innovation. Any type of hardware that is not already included in a mobile phone's body is referred to as a mobile accessory. Majority of the time, these accessories are bought for mobile phone safety and to fully utilize their benefits. Accessories for mobile phones can improve their usability, efficiency, and aesthetic appeal. The market for mobile phone accessories in India is expected to increase favorably over the projected period as a result of trends such as the rising urban population and higher usage of e-commerce. For instance, the predicted urban population of India was close to 400 million in 2021. Owing to their accessibility, consumers are more likely to purchase such accessories in metropolitan regions.

Global smartwatch shipments contracted 1.5% YoY in Q1 2023, according to Counterpoint Research’s latest Global Smartwatch Model Tracker. The 121% growth in India’s shipments managed to restrict the decline. This was the second consecutive quarter of a YoY decrease in global shipments, which were hit by the seasonal decline in demand for products from major players like Apple and Samsung, along with consumer sentiment dampened by global financial pressures.

India’s smart TV shipments grew 28% YoY in 2022, according to the latest research from Counterpoint’s IoT Service. The growth for the year was primarily driven by strong shipments during the festive season in the third quarter, multiple new launches, discounts and promotions, and the demand for bigger screen-size TVs in the lower price tier. For Q4 2022, the growth was almost flat at 2% YoY due to a slowdown in demand after the festive season.

Pros and strengths

Standard warranty: Its standard warranty is a testament to the quality and reliability of its products. It stands behind the craftsmanship and performance of its offerings and provide a warranty that covers any manufacturing defects or malfunctions during a specified period. Its commitment to providing a standard warranty and excellent after-sales services reflects its dedication to customer satisfaction and building long-term relationships.

On-ground presence with extensive sales network: Its on-ground presence is established through a combination of physical locations, including retail outlets and service centers, strategically positioned in key markets. These physical touchpoints serve as direct points of interaction with its customers, allowing them to experience its products first hand and receive personalized assistance from its knowledgeable sales staff.

Quality sourcing: It has built a robust network of suppliers and established strategic partnerships to ensure that it sources high-quality materials and components for its products. Quality sourcing begins with a rigorous supplier selection process. It carefully evaluate potential suppliers based on their track record, quality management systems, production capabilities and adherence to ethical and sustainability standards. By partnering with reliable and reputable suppliers, it can maintain consistent quality standards throughout its supply chain.

Risks and concerns

Face competition: It faces increasing competition from other mobile handset designers and manufacturers and distributors for its feature phones as well as its smart phones. Many of its existing and potential competitors in India and in overseas markets may have substantially greater brand recognition, longer operating histories, greater financial, research and technological resources, product development, sales, marketing, more experienced management, access to a cheaper cost of capital and other resources than it do. Some of its competitors may have lower costs, or be able to offer lower prices and a larger variety of products in order to gain market share.

Depends on third-party logistics providers: It does not have an in-house logistics facility and rely completely on third-party logistics providers on provision of logistic services. These third-party logistic providers assist it in supply and transportation of its products to its distributors. The logistic services that its third-party logistic providers provide to it are critical to its supply chain and its ability to manage supply chain risk and distribution costs, as well as maintain control and traceability over its products.

Rely on limited number of third-party suppliers: It purchases a substantial portion of its materials and components from a limited set of suppliers. A majority of critical components, such as chipsets are sourced from a single source to get the benefits of, amongst other things, price, design effort, inventory, supply chain and after sales efficiency. Although it has maintained stable relationships with these suppliers, it cannot assure that it would be able to source raw materials from alternative sources, at acceptable prices or at all, in the event it could not obtain such materials from its existing suppliers in an adequate quantity and timely manner for any reason and of good quality. 

Outlook

Cellecor Gadgets is engaged in the procurement, branding, and distribution of televisions, mobile phones, Smart Wearable, mobile accessories, smart watches, and neckbands. It sells its products under its flagship brand, i.e., CELLECOR. On the concern side, It faces increasing competition from other mobile handset designers and manufacturers and distributors for its feature phones as well as its smart phones. Many of its existing and potential competitors in India and in overseas markets.  

The issue has been offered in a price band of Rs 87-92 per equity share. The aggregate size of the offer is Rs 48.01 crore to Rs 50.77 crore based on lower and upper price band respectively.  On performance front, total revenue from operations for the year ended on FY 2022-23 was Rs 26,435.20 lakh as compared to Rs 12,128.99 lakh during the FY 2021-22. Profit after Tax (PAT) increased to Rs 797.07 lakh in FY 2022-23 from Rs 213.56 lakh in the FY 2021-22. Going forward, it is doing R&D on regular basis to launch new products. It is launching men’s grooming goods & white goods i.e. Washing Machine etc. As a company, it is dedicated in delivering innovative and high-quality solutions, it is constantly striving to meet the evolving needs of its customers. After months of research, development and rigorous testing, it is confident that these new additions to its product lineup will exceed expectations and enhance the daily lives of its consumers.