Sheela Foam Limited

Key Financial Figures

Consolidated Q2 FY27 Performance:

  • Revenue from operations: ₹1,045 crores, representing 19% YoY growth
  • Operating EBITDA: ₹87 crores (margin 8.4%), flat compared to same quarter last year
  • Reported EBITDA: ₹83 crores
  • PAT: ₹46 crores, approximately 5x increase from ₹10 crores in Q2 FY26
  • Cash EPS: ₹8.3

Consolidated H1 FY27 Performance:

  • Revenue: ₹2,077 crores, representing 22% growth from ₹1,696 crores in H1 FY26
  • Operating EBITDA: ₹200 crores (margin 9.6%), up 23% from ₹162 crores
  • PAT: ₹109 crores, more than 6x increase from ₹17 crores
  • EPS: ₹18.7 compared to diluted EPS of ₹9.8 last year

Standalone Performance:

  • Q2 Revenue: ₹781 crores (17% growth)
  • Q2 EBITDA: ₹61 crores (margin 7.8%)
  • H1 Revenue: ₹1,452 crores (18% growth)
  • H1 EBITDA: ₹129 crores (5% growth)

Business Environment and Challenges

The company faced unprecedented challenges with crude oil prices up approximately 50% since February, and key raw materials experiencing even sharper increases:

  • Polyol: Up 65% since mid-February
  • TDI: Up 33% since mid-February

The Middle East war disrupted supply chains and logistics, with some facilities partially destroyed and others restricted due to Hormuz blockage. Additionally, the festive season shifted from September last year to October this year, moving demand from Q2 to Q3.

Strategic Response and Investments

Despite challenges, the company maintained customer service through strong supplier relationships and passed price increases to market. The company launched the Great Sleepwell Festival across the country, described as one of the strongest consumer schemes ever introduced, which involved additional marketing spend of ₹15-16 crores in the quarter.

Furlenco Acquisition and Integration

Furlenco became a subsidiary of Sheela Foam effective October 1, 2026. Key details:

  • Current stake: 35% on accounting basis, 43% on fully diluted basis
  • Private equity investors have given up special rights, giving Sheela Foam absolute control
  • Line-by-line consolidation will begin from Q3 FY27
  • H1 FY27 Furlenco performance: Revenue ₹229 crores (34% growth), EBITDA ₹89 crores (69% growth), margin ~39%
  • Furlenco turnaround: From ₹139 crores revenue and ₹130 crores loss in FY24 to expected ₹500-600 crores revenue with 40% EBITDA margin in FY27
  • Subscriber base: 200,000 (2 lakh) subscribers, present in 30+ cities

Segment Performance

H1 FY27 Segment Growth:

  • Mattress: 11% growth
  • Foam: 26% growth
  • Volumes: Broadly flat, reflecting pricing actions and festive season shift

International Subsidiaries:

  • Australia (Joyce): H1 revenue ₹241 crores (16% growth), EBITDA margin 13.4%
  • Spain (Interplasp): H1 revenue ₹250 crores (44% growth), EBITDA margin 10.7%
  • Australia took a one-time provision of ₹7 crores related to customer A.H. Beard going into administration

Growth Initiatives and Business Pillars

The group now operates on four pillars:

1. Mattress: Serving mass to premium segments with Sleepwell, Kurlon, Tarang, Aram, Chattam & Wells, and Nature's Rest brands

2. Furniture: Rental (Furlenco) and retail (Sleepwell and Kurlon branded furniture)

3. Foam and Cushioning: Technical and industrial foam business under B2B category with brands like FeatherFoam and Jumpz HR

4. International and IT: Joyce (Australia), Interplasp (Spain), and technology company Staqo (28% EBITDA margin)

Other Business Metrics

  • D2C and e-commerce: Strong growth led by brand.com website
  • U2O (Unorganized to Organized) business: Reached 10,000+ touch points, grew 41%
  • Price increases: 35-40% in foam and ~25% in mattress since Middle East crisis began

Financial Position and Outlook

  • Net debt: ~₹600 crores at Sheela Foam consolidated level, expected to reduce to ₹500-550 crores by FY27 end
  • With Furlenco consolidation: Total net debt expected ~₹800 crores with EBITDA of ~₹600 crores
  • FY27 guidance: Combined group revenue ~₹5,000 crores, EBITDA ~₹600 crores (margin ~12%)
  • Tax benefits: ₹150 crores tax refund expected to provide tax benefits for another 1-2 years
  • Other income: Typically ~₹10 crores per quarter, includes returns on ₹110 crores investments (10-12% return)

Raw Material Outlook

Management indicated that 15-20% of TDI capacity has been wiped out due to war and European closures, with polyol impact being lesser. The primary issue is logistics rather than capacity. Normalization expected if Hormuz situation resolves.

Margin Outlook

Management targets 12-15% EBITDA margins in normal conditions. Current margins impacted by raw material inflation and strategic marketing investments. Gross margins at 38% compared to historical 40-42% range.

Volume Strategy

The company is introducing new technology for support layers to position products below ₹10,000 price point while maintaining margins, targeting the 40% market segment at this price level.