Sheela Foam Limited — Investor Meet, 05-02-2025: Analysts/Institutional Investor Meet/Con. Call Updates

1. Financial Performance: Sheela Foam reported a total revenue of ₹791 cr for the quarter, marking a remarkable 54% year-on-year growth. EBITDA increased by 34% to ₹71 cr, resulting in an EBITDA margin of 9%. Net profit, however, fell to ₹25 cr, a decline of 19% from the previous year. For the nine-month period, revenue reached ₹1,897 cr, up 36% y-o-y, while EBITDA stood at ₹189 cr (19% growth), with profit decreasing by 11% to ₹100 cr.

2. Future Outlook and Growth Drivers: Management emphasized a strategic transformation towards B2C, especially in the mattress segment, expecting an 18% growth in this area over the next two to three years. The focus will also be on expanding e-commerce sales, which now contribute approximately 12% of the overall mattress market.

3. Order Book and Operational Updates: The integration of the Kurlon acquisition is nearing completion, and management anticipates robust performance both domestically and internationally. The mattress volume grew 24% quarter-on-quarter, demonstrating strong operational momentum.

4. Analyst Q&A Insights (Detailed):

- **Revenue and Profitability**: Analysts inquired about future revenue expectations and profitability challenges. Management projected steady revenue growth driven by strong demand for mattresses and anticipated margins of around 15% for B2C.

- **Market Position and Competitive Landscape**: Insights on maintaining competitive advantages were shared, particularly the strengths of the Sleepwell and Kurlon brands across different regions.

- **Operational Challenges or Risks**: Concerns raised related to supply chain pressures, especially with foam chemicals, but management expressed confidence in weathering these challenges.

- **Capex and Capital Allocation**: Plans to limit capex to maintenance levels were reiterated, with a focus on improving cash flow and reducing net debt.

- **Strategic Priorities and Long-Term Vision**: Discussion focused on sustainability and continued brand development in both domestic and international markets.

5. Market or Regulatory Updates: Management highlighted a reduction in basic customs duty for imported mattresses and noted that the impact on local manufacturing is likely to be minimal due to logistics constraints.

6. Strategic Focus Areas: The company is prioritizing innovation in product development and efficiency in operations while concurrently expanding its brand footprint in rural and urban markets.

7. Investor Insight: The financial health backed by a solid growth trajectory in the B2C sector suggests a favorable outlook for Sheela Foam. The anticipated revenue growth, coupled with strategic integrations, aligns well with a ‘buy’ position amidst market volatility. Risks such as integration challenges and margin pressures are manageable with the current strategic focus.