Sheela Foam – An exciting branded play

Here are some key takeaways from the Q2 FY24 earnings concall transcript of Sheela Foam mattresses:

• Revenue growth: The company reported a 22% year-on-year growth in revenue, driven by strong demand for mattresses and other comfort products. The company also gained market share in both organized and unorganized segments.
• Margin expansion: The company improved its EBITDA margin by 240 basis points year-on-year, mainly due to better product mix, operational efficiency, and cost optimization. The company also benefited from lower raw material prices and stable forex rates.
• New product launches: The company launched several new products in the quarter, such as Sleepwell Signature, Sleepwell Cocoon, Sleepwell Spinetech Air, and Sleepwell Feather Foam. The company also introduced a new brand, SleepX, to cater to the online and value segments.
• Outlook and guidance: The company is optimistic about the future prospects, as it expects the demand for mattresses and other comfort products to remain robust, driven by increasing awareness, urbanization, and disposable income. The company also expects to benefit from its strong distribution network, brand recall, and innovation capabilities. The company has guided for a 15% to 20% revenue growth and a 20% to 25% EBITDA growth for FY24.
• Kurl-on acquisition: The company has acquired 94.66% stake in Kurl-on Enterprises Ltd. at an equity valuation of Rs. 2,150 crore. The deal is expected to be completed by December 2023. The management expects significant synergies from the acquisition in terms of product portfolio, distribution network, manufacturing capacity, and cost savings. The combined entity will have a market share of more than 50% in India’s organised mattress space2.
• Furlenco acquisition: The company has acquired 35% stake in Furlenco, a furniture rental company, for Rs. 300 crore. The deal is expected to be completed by March 2024. The management believes that Furlenco is a disruptive player in the furniture industry, with a strong brand, loyal customer base, and scalable business model. [The company aims to leverage Furlenco’s online presence, data analytics, and design capabilities to expand its own product offerings and reach new customer segments]