Sheela Foam

Sheela Foam reported consolidated revenues of ₹850 crores in Q4 FY25 with an EBITDA margin of 8.1% and a net profit of ₹22 crores. For the full FY25, consolidated revenues stood at ₹3,500 crores, EBITDA at ₹300 crores (8.3% margin), and net profit at ₹100 crores. While operational performance improved with gross margins reflecting ₹120 crores in annual cost savings, profitability was impacted by increased interest costs from the Kurlon acquisition debt and higher depreciation.

The integration of Kurlon Enterprise Limited (KEL) into Sheela Foam Limited (SFL) is progressing, with most Kurlon brand sales now routed through SFL, aiding revenue growth. The company has realized ₹120 crores in annual cost savings, primarily reflected in gross margins, and an additional ₹130 crores of savings have been executed. These further savings are expected to fully impact by Q2 FY26, stemming from plant rationalization (reducing from 18 to 12 facilities) and technical improvements.

Sheela Foam is actively expanding its distribution network, having added nearly 400 exclusive showrooms and 1700 dealers in FY25. The company plans to add over 1000 new touchpoints in FY26, focusing on enhancing presence in MBOs and adding new distributor-owned outlets for both Sleepwell and Kurlon. Small-town initiatives (STI) are showing encouraging growth, with sales expected to reach ₹100 crore mark soon, supported by dedicated STI distributors.

The B2B technical foam segment maintained steady volumes in FY25, with the company retaining its share in auto lamination. New products are being developed for industries such as aviation, ceramic filters, acoustics, and footwear insoles. The Comfort foam segment, which includes furniture cushioning, saw strong growth in both revenue and volume, expanding its dealer network by nearly 1000 new dealers. Management expects B2B volumes to grow at an 8-10% CAGR.

Furlenco, the furniture rental business, achieved its first full year of positive profitability in FY25, with an exiting Annual Recurring Revenue (ARR) of ₹300 crores and Average Selling Price (ASP) above ₹1,00,000. Furlenco expanded into new cities like Indore, Kolkata, and Ahmedabad. Staqo, the IT initiative, continued its growth trajectory with revenues increasing by 61% YoY in FY25 and maintaining EBITDA margins around 28%, onboarding new clients across PSU, MSME, and private domains.

In Australia, the company successfully received price increases from most customers, improving profitability. Spain saw over 15% volume growth, but lower raw material prices and increased overheads from enhanced capacity impacted revenue and profitability. Management acknowledged that international businesses (Australia and Spain) have remained stagnant in revenue terms since acquisition, and while they had a role, the priority is now firmly on the India business and mattress segment.

The company's Indian balance sheet currently carries a debt of ₹700-750 crores against ₹450 crores in cash. Management aims to fully deleverage the Indian balance sheet within the next 2-3 years, partly through monetizing real estate worth ₹200 crores. This is expected to reduce the annual interest component from ₹100 crores to ₹10-15 crores. For FY26, the company targets a CAPEX not exceeding ₹75 crores across India and overseas.

Sheela Foam targets an India business revenue growth of approximately 15% per annum and EBITDA margins of 13-14% (potentially up to 15%) within the next 2-3 years. The strategy involves continued distribution expansion, focus on small-town initiatives, and leveraging the combined strength of Sleepwell and Kurlon brands. The company is not pursuing new acquisitions at present, prioritizing the integration and stabilization of existing operations.