Sheela Foam

Sheela Foam reported a robust Q4 FY26 with consolidated revenue growing 24% YoY to INR1,050 crores, and full-year revenue up 11% to INR3,821 crores. The company achieved its highest ever annual foam production, top line, and EBITDA in FY26, with consolidated core EBITDA margins expanding by 400 bps to 11.5% in Q4 and 261 bps to 10.8% for the full year. This performance was largely attributed to the successful integration of Kurlon, which visibly contributed to both revenue and profitability, alongside disciplined cost control.

The company significantly expanded its market reach by adding approximately 600 net new showrooms in FY26, with Kurlon showroom expansion gaining traction, particularly in Northern India. E-commerce sales saw substantial growth, with brand.com sales up 136% YoY and platform sales up 39% YoY. The Unorganized to Organized (U2O) business, operating through 8,400 dealers, delivered impressive volume growth of 65% and value growth of 111% in FY26, supported by product innovation and deeper distribution.

Sheela Foam's international operations in Australia (Joyce) and Spain delivered stellar performance. Australia reported revenue of INR422 crores in FY26, with EBITDA margins improving by approximately 400 bps to 10% for the full year, driven by efficiency measures and price hikes. Spain's revenue stood at INR391 crores in FY26, with EBITDA margins reaching 10.4% (up from 8.4% in FY25), with management targeting a sustainable 10-12% margin for these regions.

Furlenco demonstrated a significant turnaround, reporting a PAT of nearly INR60 crores in FY26, a substantial improvement from INR3 crores in FY25, on a revenue of INR370 crores (over 60% YoY growth). The company is well-poised for continued growth in FY27, with plans to expand its integrated Furlenco and Sheela Foam stores from over 40 to cross 100 during the current year. Management indicated a potential IPO for Furlenco within the next 3-4 months or approximately one year, once it reaches a threshold size.

Sheela Foam reduced its net debt by INR156 crores in FY26, reflecting strong underlying cash generation and balance sheet discipline. The company's consolidated debt stands at INR600-700 crores, with India debt of approximately INR300 crores expected to be repaid within 1-1.5 years. In a significant move, the Board recommended a 20% dividend for FY26, marking the first dividend distribution since the company's listing, underscoring its strengthened cash generation profile.

The company acknowledged the high volatility in raw material prices, particularly for TDI and polyol, which have seen large swings of INR40-50 per kilo multiple times a month. Despite this, management successfully passed on cost increases across channels, ensuring no material impact on margins going forward^⏳. However, INR40 crores of expected synergy savings from new machines for Kurlon integration are delayed by 1.5 quarters, with installation anticipated by mid-to-end of the current quarter.

Sheela Foam revised its depreciation policy to better reflect the actual useful life of its long-lasting assets, such as foaming machines, which can operate for 40-50 years. The previous written-down method depreciated 70-75% of asset value within the first 3-4 years, which did not accurately represent the amortization. This change aims to align the cost of depreciation with the asset's economic life, providing a more realistic financial picture.