Sheela Foams Ltd (SFL) cmp 1240. Company sells matresses under name of Sleepwell. An important development during the preceding quarter has been acquisition of closest competitor Kurlon. That makes the company an even more dominant player in the segment. However threat of new companies launching similar products on E commerce platforms remains. It also acquired 35% stake in Furlenco which is a furniture rental company. ( For me furlenco stake acquisition did not make too much sense, but in these kind of events, we need to give more rope to management)
Company recently faced strong headwinds due to fall in raw material prices and hence high priced inventory problems. Sales degrew though margins managed to hold up in 11-12% region.
Technically it crossed its post listing closing high of 880 (bar chart shows high of 922) in January 2021 and had a strong run up to a high of 2027 in April 2022. It has been in a corrective mode since then posting lows of 906 (retest of previous major resistance) and recently managed to close above crucial swing resistance at 1215. There is a hint of a retest on weekly line chart .
So here we have a big fall from highs of 2000 plus to levels below 1000, and then consolidation below 1215 for nearly 10 months and then a breakout above 1215. Need to see how this pattern plays out. Fundamentally management talks of good growth in q2 fy 24 concall, citing better numbers for q3 fy 24 due to festive sales. If the acquisition of Kurlon plays out well then we could see good upsides. As of now there is no clear picture, except hints of a turnaround on charts. disc: small starter position based on techno funda picture.
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