Sheela Foam: Strategic Growth Fuels Future Profitability

Ashwin Thakker

16 Aug 2025 — 2 min read

Key Facts:

Targeting 15% revenue growth over the next three years.
Plans to open 1,000 new showrooms in FY26; 234 already operational in Q1.
E-commerce projected for 50% value growth in FY26.
Value-segment mattresses (Tarang/Aaram) aim for over Rs. 100 crore revenue in FY26.
Anticipates 14-15% EBITDA margin within three years from operating leverage.
Expects additional Rs. 60 crore savings from Kurlon integration by FY26 end.
Plans to reduce net debt by Rs. 300-350 crore via asset monetization and PAT.

Sheela Foam Limited demonstrated robust Q1 FY26 performance, setting the stage for aggressive forward-looking guidance. The company's strategic integration of Kurlon and focused market penetration initiatives are poised to drive significant top-line growth and enhance profitability. This earnings call underscored a clear roadmap for sustained expansion and financial strength.

Driving Revenue Through Strategic Expansion

Sheela Foam targets substantial top-line growth, aiming for a 15% revenue increase over the next three years. Key initiatives include opening approximately 1,000 new showrooms in FY26, with 234 already operational. This significantly expands its distribution network across India. The value-driven Tarang and Aaram mattresses, targeting the sub-Rs. 10,000 market, are projected to contribute over Rs. 100 crores in revenue for FY26, building on a robust 60% year-on-year volume growth. E-commerce remains a strong channel, expected to achieve 50% value growth in FY26. Management stated:

"Our mattress volumes in Q1 FY '26 grew by 10% year-on-year."

This strategy highlights a commitment to broad market penetration and capturing diverse consumer segments.

Enhancing Profitability and Financial Strength

Sheela Foam is strategically improving profitability and financial health. The Kurlon integration has yielded significant cost savings, with an additional Rs. 60 crores in benefits anticipated by FY26 end, building on Rs. 190 crores already realized. This, alongside ongoing cost optimization, has notably improved gross margins to 43.5%. The company targets an EBITDA margin of 14-15% within three years, driven by operational leverage from increasing sales. Management emphasized:

"Core EBITDA margins also stood at 11.7% against 8.4% for the corresponding quarter last year."

Furthermore, Sheela Foam aims to reduce its net debt by Rs. 300-350 crores through asset monetization and strong profit generation, reflecting a disciplined financial outlook.

Sheela Foam's Q1 FY26 earnings call paints a picture of deliberate growth. Through aggressive market expansion, strategic cost efficiencies from the Kurlon integration, and disciplined financial management, the company is well-positioned for sustained revenue growth and improved profitability. The guidance reflects confidence in achieving long-term financial targets and solidifying its market leadership.

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