India Ratings has reaffirmed Sheela Foam’s IND AA/Stable rating while assigning a rating to new bank facilities of Rs 180 crore. The company successfully redeemed Rs 181.25 crore in NCDs, significantly improving its leverage profile. With net leverage dropping to 1.9x in FY26, the company is seeing benefits from its Kurlon acquisition and e-commerce expansion.
Sheela Foam Credit Rating Reaffirmed; NCDs Fully Redeemed
India Ratings and Research (Ind-Ra) has reaffirmed the 'IND AA/Stable' credit rating for Sheela Foam Ltd while assigning the same to new bank loan facilities of Rs 180 crore. The agency also formally withdrew its rating on Rs 181.25 crore of non-convertible debentures (NCDs) following full redemption.
Reader Takeaway: Improved debt ratios from 3.3x to 1.9x leverage signal financial stability, though interest coverage remains a focal monitor point.
What just happened
India Ratings maintained the 'IND AA/Stable' rating for Sheela Foam’s existing Rs 700 crore bank loan facilities. The agency issued a fresh rating for Rs 180 crore in additional credit facilities. Most notably, the company cleared its outstanding NCD debt of Rs 181.25 crore, receiving a withdrawal of the associated credit rating after providing the necessary no-dues certification.
Why this matters
The reduction of debt through the full repayment of NCDs is a positive signal for balance sheet health. The company’s consolidated net leverage (net debt/EBITDA) improved significantly to 1.9x in FY26, down from 3.3x in FY25. This deleveraging effort, combined with an improved interest coverage ratio of 4.1x, reflects stronger operational cash flow generation.
The backstory
Sheela Foam’s operational scale has expanded following the strategic acquisition of Kurlon Enterprises Limited (KEL). Growth in the e-commerce segment has also contributed to topline expansion. Revenue for FY26 stood at Rs 3,820.8 crore, up from Rs 3,439.2 crore in the previous fiscal. The company also brought House of Kieraya Limited (HOK) into its consolidated fold as a subsidiary starting October 2026.
What changes now
Management projects a revenue growth run-rate of 10%-12% for domestic operations in FY27. Ind-Ra anticipates EBITDA margins will stabilize in the 10%-11% range for the same period. The market will focus on how the company continues to realize synergies from the Kurlon acquisition to further drive profitability.
Risks to watch
While leverage has decreased, the company remains sensitive to raw material price fluctuations in the foam industry. Furthermore, the integration of new subsidiaries like HOK will require consistent operational oversight to ensure the maintained margins are not diluted during the scaling phase.