Sheela Foam Hits Record FY26 Performance, Proposes First Dividend

Sheela Foam Limited announced its financial results for the fourth quarter and full fiscal year 2026, reporting its highest-ever annual figures for foam production, revenue, and EBITDA.

Key Highlights

For the full fiscal year 2026, Sheela Foam achieved its best-ever performance in foam production, revenue, and EBITDA. The integration of Kurlon significantly contributed, driving a 12% growth in mattress volumes for the full year and 13% in the fourth quarter. The company's 'U2O' (Under 2000 towns) initiative expanded its reach to over 5,000 towns, achieving 111% value growth. E-commerce channels also saw strong gains, with brand.com sales up 136% and third-party platform sales increasing by 39%. Following debt reduction and successful integration, the board recommended a 20% dividend, marking the first such payout since the company's listing.

International operations in Australia and Spain also reported improved profitability, with margins increasing by 400 basis points and 200 basis points, respectively, compared to FY25.

Strategic Wins

This record performance underscores the successful consolidation and growth following the Kurlon acquisition. The recommended dividend signals improved financial health and confidence in future earnings. The expansion into smaller towns and digital channels appears to be a successful growth strategy, while the company's ability to manage raw material price increases through price adjustments demonstrates operational resilience.

Company Background

Sheela Foam, a major player in the foam and bedding sector, acquired Kurlon to broaden its market reach and product offerings. Since the acquisition, the company has prioritized debt reduction and operational efficiency. The 'U2O' initiative is a key part of its strategy to access India's growing markets in Tier 2 and Tier 3 cities.

Future Outlook

Building on its strong FY26 foundation, Sheela Foam anticipates over 15% revenue growth in the coming years. Planned capital expenditure of INR 125–150 crore for FY27 will support maintenance, debottlenecking, and store expansion. The company aims to clear its remaining India-based debt of approximately INR 300 crore within 1 to 1.5 years. Additionally, its subsidiary Furlenco is targeted to reach INR 500 crore in revenue by FY27, with a potential IPO being considered within the next year.

Potential Risks

Management has identified geopolitical risks, particularly related to the Middle East, which could disrupt supply chains. A delay of 1.5 quarters in realizing INR 40 crore of synergy benefits from the Kurlon integration is also noted, due to imported machinery installation issues. Volatility in raw material prices for Polyol and TDI, which increased by 25-35%, remains a concern, though the company has implemented price hikes to offset this. Minimal margin impact is expected in H1 FY27 due to efficient inventory management and current price adjustments.

Performance Metrics

• FY26 saw the highest annual foam production, revenue, and EBITDA in company history.
• Mattress volumes grew 13% in Q4 FY26 and 12% for the full FY26.
• The U2O Initiative reached over 5,000 towns, boosting value growth by 111%.
• E-commerce sales surged: Brand.com up 136%, third-party platforms up 39%.
• A 20% dividend was recommended, the first since Sheela Foam's listing.
• Subsidiary margins improved: Australia +400 bps, Spain +200 bps versus FY25.
• Furlenco reported INR 60 crore PAT and 30-35% ROCE.

What to Watch Next

Investors will monitor Sheela Foam's progress on debt reduction and the full realization of synergy benefits from the Kurlon integration. Continued growth in the U2O and e-commerce segments will also be key. The potential Furlenco IPO and management of raw material price fluctuations are critical factors to track.