Sheela Foam Ltd
(NSE:SFL)
₹
695.95
+4.85 (+0.7%)
Market Cap: 76.07 Bil
Enterprise Value: 83.53 Bil
PE Ratio: 35.55
PB Ratio: 2.33
GF Score: 80/100 
Q1 2027 Sheela Foam Ltd Earnings Call Transcript
Aug 05, 2026 / 10:30AM GMT
Release Date Price:
₹771.65
(+0.47%)
Key Points
Positve
- Sheela Foam Ltd (BOM:540203) achieved record consolidated revenue of over INR1,000 crores and EBITDA of over INR100 crores in Q1 FY27, with consolidated revenue up 26% YoY and EBITDA up 45% YoY.
- The company's international operations (Australia and Spain) delivered exceptional performance, with EBITDA margins improving to 12.8% and 14.7% respectively, driven by strategic yield improvements and supply chain restructuring.
- The U2O (unorganized to organized) business expanded to nearly 10,000 dealers, clocking 81% YoY growth in value and 19% in volumes, supported by new product introductions like 5 and 6-inch mattresses.
- E-commerce sales grew strongly, with brand.com sales up 69% YoY and platform sales up 19%, while the overall category grew 30% in value and 23% in volumes.
- The company is entering the furniture segment with sofa beds under Sleeper and Kurlon brands, leveraging existing infrastructure and distribution network for capital-efficient growth.
- The IT business, Stacko, registered 67% revenue growth with a healthy EBITDA run rate of 28-30%, and the flagship ERP product Presence 360 crossed 3.2 lakh users.
- ESG ratings improved across multiple agencies, including a category upgrade to 'strong' in Crystal ESG ratings and improved S&P Global CSA percentile.
- The company maintains a strong commitment to its 15% revenue growth and 15% EBITDA margin target, with confidence in achieving double-digit volume growth as raw material volatility subsides.
- Furlenco's acquired subscriber base grew 36%, with revenue up 38% and EBITDA up 65% YoY, indicating strong performance in the furniture rental segment.
- The company's strategy of maintaining consistent supply and inventory during volatile raw material periods differentiates it from unorganized players, reinforcing customer loyalty and market leadership.
Negative
- Standalone EBITDA margin moderated due to sharp fall in raw material prices during the quarter, with gross margins impacted by volatility in TDI and polyol prices.
- Volume growth in the Indian mattress business was only 6% YoY, below the management's desired 10% level, reflecting market conditions and competitive intensity.
- Raw material prices remain highly volatile, with fluctuations ranging from +40% to -20%, making it difficult to maintain margins and requiring frequent price adjustments.
- The company's debt levels remain elevated, with India-level debt above INR300 crores and overseas debt around INR350 crores, and the balance sheet is not expected to be debt-free by FY27 end.
- The contribution from Furlenco (associate) was lower due to a one-time deferred tax asset recognition in the previous year, and operating profit growth was modest in Q1.
- The company's return on capital employed (ROCE) is currently around 10%, which is below the desired 20-25% range, and achieving this target will take time.
- The integration of Kurlon is still incomplete, with only 75-80% of synergies realized, and the remaining 15-20% are expected to be achieved over time.
- The company faces challenges in passing on raw material price increases to customers in a timely manner, leading to margin pressure during periods of rapid price movements.
- The international operations' exceptional margins are partly due to lower-cost inventory and favorable currency changes, which may not be sustainable in the long term.
- The company's foam business, which grew faster than mattresses, pulled down gross margins, and the management acknowledges that this growth was cash-accretive but margin-dilutive.
Operator
Ladies and Gentlemen, good day and welcome to the Sheila Homes Limited Q1 FY27 Earnings Conference Call hosted by Dollar Capital Markets Pvt. Ltd. (Operator Instructions). I would now like to hand the conference over to Ms. Savitha Singh from Dolath Capital Markets Limited.
Thank you and over to you, ma'am
Savitha Singh;Rahul Gautam
Dolat Capital - Director - Corporate Access;Sheela Foam Ltd -
Thank you, Mano. Good afternoon, everyone. I, Savitha Singh on behalf of Dolath Capital, welcome you all to the Q1 FY27 earnings conference call of Sheela Foam Limited.
I would like to thank the management for giving us this opportunity to host the call.
Today from the management team, we have with us Mr. Rahul Gautam, Chairman and Managing Director, Mr. Tushar Gautam, Vice Chairman and Joint Managing Director, Mr. Rakesh Chahar, Deputy Managing Director, and Mr. Amit Kumar Gupta, who is the Group's CFO.
I would now hand over the call to the management team for their opening remarks. Over to you, sir.
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