Sheela Foam Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Sheela Foam Ltd trades at ₹700, in a confirmed uptrend and 8 weeks into that stage. That is +6.8% against its own 200-day average. It sits at 71% of a 52-week range of ₹494 to ₹784. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (2 weeks and counting).

Today the stock is in a confirmed uptrend — week 8 of stage 2, confirmed. At ₹700 it trades +6.8% versus its 200-day average and sits at 71% of its 52-week range (₹494–₹784).

Against the market, two honest reads. Cumulative: over the last 9.7 years the stock moved +36% while the NIFTY 500 moved +237% — behind the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (2 weeks and counting; last ahead the week of 2026-07-31) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Sheela Foam Ltd's story is not scored yet against the markers our research file set on 27 June 2026. Where it sits in its own cycle: EARLY_EXPANSION. Our fortnightly research layers last read it on 19 July 2026.

Our read, 27 June 2026. Sheela Foam's Kurlon integration is delivering — EBITDA crossed its 10% milestone and PAT doubled in FY26 — but the next leg requires the delayed synergy machine to fire, FY27 EBITDA margins to hold at 11-12%, and a ROCE recovery from its current trough near 6%.

From the numbers. The operating cycle is in early expansion — EBITDA margin rising from 7% in FY25 to 10.8% in FY26, EPS off trough by 109%, and OCF/PAT at 2.44x. The cycle-normalized verdict is FAIRLY_PRICED: normalized PE at the 11th…

From the price. Price stage 2, week 8 — above its 200-day line, relative strength falling.

From the research. Sheela Foam's Kurlon integration is delivering — EBITDA crossed its 10% milestone and PAT doubled in FY26 — but the next leg requires the delayed synergy machine to fire, FY27 EBITDA margins to hold at 11-12%, and a…

🚨 Where they disagree. PB of 2.44x reflects the Kurlon acquisition goodwill and acquisition-inflated asset base. Book value per share of Rs 298 represents the equity base after funding the Kurlon acquisition primarily through debt.

What is proven. Sheela Foam's Kurlon integration is delivering — EBITDA crossed its 10% milestone and PAT doubled in FY26 — but the next leg requires the delayed synergy machine to fire, FY27 EBITDA margins to hold at 11-12%, and a ROCE recovery from its current trough near 6%.

What is not proven yet. If OPM in FY27 Q1 or Q2 prints below 10% despite management's 11-12% guidance, or if the malleable-fiber synergy machine is delayed past Q2 FY27 for a third consecutive quarter, the margin recovery thesis loses its ground cause and the stock becomes a value-trap holding elevated capex-inflated assets with no visible earnings trigger. Similarly, a Furlenco PAT reversal in FY27 without management acknowledgment would confirm the pattern of undisclosed earnings deterioration.

🚨 What would change our mind. If OPM in FY27 Q1 or Q2 prints below 10% despite management's 11-12% guidance, or if the malleable-fiber synergy machine is delayed past Q2 FY27 for a third consecutive quarter, the margin recovery thesis loses its ground cause and the stock becomes a value-trap holding elevated capex-inflated assets with no visible earnings trigger. Similarly, a Furlenco PAT reversal in FY27 without management acknowledgment would confirm the pattern of undisclosed earnings deterioration.

🚨 Layer 1 read, 19 July 2026 — DROP. Kurlon story alive but the earnings jump is one-off, ROE is 4.8% and management has missed four straight targets. Sheela Foam's headline Mar-2026 PAT +607% is not operating — the bridge is a +485cr exceptional leg against a tax offset and single_quarter_spike fired (latest profit 92cr vs a 13cr trailing median). The real engine is weak: ROE sits at 4.8% at the 5.7th percentile of its own band with a STRUCTURAL_DECLINE flag, management has missed the synergy machine, showroom, margin and Furlenco targets in four consecutive calls, and FIIs are exiting. It stays a low-conviction P2 only because the Kurlon 10% EBITDA milestone is a genuine HIT, not a broken thesis.

What would change Layer 1’s mind. Consuming the Timeline's own kill-switch: if FY27 Q1/Q2 OPM prints below 10% despite the 11-12% guide, OR the synergy machine slips a third straight quarter past Q2 FY27, the margin-recovery thesis loses its cause and this becomes a clear DROP; conversely a clean, exceptional-free 11%+ operating quarter would lift conviction.

The test written in advance. Management execution credibility — four consecutive target misses — Management execution credibility — four consecutive target misses by the next result.

The test written in advance. Raw material volatility — TDI and Polyol swinging Rs 40-50/kg monthly — Raw material volatility — TDI and Polyol swinging Rs 40-50/kg monthly Q1 FY27 gross margin below 42% (vs 44% in Q4 FY26) would indicate input cost pass-through is failing. by the next result.

🚨 What the surface reading misses. The surface reading is: EPS Rs 14.62 in FY26 vs Rs 8.22 in FY25 shows a 78% year-on-year jump — possible base effect or one-off The research reads it further: The jump is multi-quarter (EPS was Rs 22-24 in FY21-22, collapsed to Rs 8.22 in FY25 post-acquisition, and has now partially recovered). The trough was acquisition-induced (debt, depreciation, integration costs) — the turn is structural from OPM recovery and debt repayment.

🚨 What the surface reading misses. The surface reading is: OCF Rs 409 crore is well above PAT Rs 161 crore — high conversion looks unusual The research reads it further: The excess of OCF over PAT is explained by Rs 179 crore depreciation (a non-cash charge, largest contributor) and working capital improvement (CCC fell from 37 to 31 days in FY26). This is a real cash profile, not inflated by unusual items.

Lever 7 · Consolidation — BUILDING. The final Kurlon synergy tranche (Rs 40 crore annual contribution) awaits a machine installation delayed 1.5 quarters — installation now guided for end of Q1 FY27, contribution expected Q2 FY27 onward. What proves it keeps working: Malleable-fiber synergy machine — Rs 40 crore profit uplift. It stops working if Machine installation is delayed again past Q2 FY27, or if the in-house production yield falls short of the cost-offset vs external sourcing.

Lever 15 · Market-share gains — BUILDING. The U2O (unorganised-to-organised) channel, operating through 8,400 dealers across 5,000 towns in 24 states, grew 65% by volume and 111% by value in FY26 — the structured route into India's 85% unorganised mattress market. What proves it keeps working: U2O channel momentum — 65% volume growth, unorganised-to-organised tailwind. It stops working if Raw material inflation causes SFL to raise dealer prices faster than unorganised competition, or if a large-format retailer captures the mass-market mattress segment with a channel that bypasses the dealer network.

Lever 4 · Paying down debt — BUILDING. Borrowings fell from Rs 1,493 crore to Rs 908 crore over FY25-FY26, with India standalone debt of Rs 300 crore guided for payoff within 18 months — reducing annual interest from approximately Rs 140 crore (peak) toward Rs 50 crore (FY27 guidance). What proves it keeps working: Debt payoff and interest cost reduction improving PAT leverage. It stops working if OCF deteriorates materially (below Rs 300 crore per year) or management chooses to redeploy cash into an acquisition instead of debt repayment.

Sources: our stock research file (27 June 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Sheela Foam Ltd reported ₹1,032 Cr of revenue in the Jun 26 quarter, +25.7% year on year. That is the 11th straight quarter of year-on-year growth. Over 10 years it has compounded at 9.4% a year. The last full year, FY26, came in at ₹3,821 Cr. The last four reported quarters add to ₹4,031 Cr.

Why this happened. Of the Rs 250 crore Kurlon synergy target, Rs 190-200 crore has been realised through procurement efficiency and overhead consolidation. The remaining Rs 40-50 crore depends on a malleable-fiber comfort layer machine that was committed for Q3 FY26, delayed to mid-Q3 in February 2026, and confirmed still under installation at the May 2026 call. When it commissions, it allows Sheela to produce the high-margin comfort layers in-house rather than sourcing them externally. At Rs 40 crore annual contribution and a 11% consolidated EBITDA margin base on Rs 3,821 crore revenue, this is approximately 100 basis points of additional EBITDA lift — meaningful at the current scale.

FY26 revenue came in at ₹3,821 Cr (+11.1% on the year), capping 10 years at 9.4% compound. The latest quarter (Jun 26) printed ₹1,032 Cr, +25.7% year on year — the 11th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +17.0% growth against the decade's 9.4% — the current year is running faster than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +16.8% over the last 4 quarters against +13.2%/yr over the last 8 — accelerating; TTM profit +280.7% vs +7.7%/yr — accelerating.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Sheela Foam Ltd's operating margin is 11.0% in the Jun 26 quarter, +2.0 percentage points against the same quarter a year ago. Across 13 fiscal years the operating margin has ranged 7.0% to 15.0%. The current quarter sits inside that band.

The latest quarter's operating margin is 11.0%, +2.0 pp against the same quarter a year ago. Across 13 fiscal years the operating margin has ranged 7.0%–15.0%.

Why the margin moved: operating margin went +1.4 pp year on year while gross margin went −4.0 pp — the gain came mostly from the gross line: input costs and pricing.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Sheela Foam Ltd earned ₹62.0 Cr of net profit in the Jun 26 quarter, +785.7% year on year. It is the 3rd consecutive quarter of growth. Full-year FY26 profit was ₹161 Cr. The 10-year compound rate is 4.4%. That is 6.0% of the quarter's revenue. The same quarter a year earlier earned ₹7.0 Cr.

Jun 26 profit was ₹62.0 Cr, +785.7% year on year — the 3rd consecutive quarter of growth. On the full year, FY26 printed ₹161 Cr (+78.9%), and the 10-year compound rate is 4.4%.

Why profit moved: revenue contributed +25.7% and the margin +2.0 pp — the quarter was margin-led: most of the profit growth came from keeping more of each sale.

Pace comparison, last four quarters: profit +388.8% vs revenue +17.0%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 244% of Sheela Foam Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY26 that was ₹409 Cr of operating cash against ₹161 Cr of profit. After ₹198 Cr of capital spending, ₹211 Cr was left as free cash.

FY26: operating cash of ₹409 Cr against reported profit of ₹161 Cr, leaving free cash of ₹211 Cr after ₹198 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 244% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 244%: the cash cycle held roughly steady between FY21 and FY26 — so conversion tracks profitability rather than the cycle.

Router verdict: the bigger cash user is investment — capital spending ran 5.3× depreciation over three years, so the next section's job is to check what that build-out is buying.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Sheela Foam Ltd's cash conversion cycle runs 31 days in FY26, down from 41 days in FY21. Capital spending ran ₹2,556 Cr over the last 3 years. At FY26 sales of ₹3,821 Cr each day of that cycle holds about ₹10.5 Cr, so roughly ₹325 Cr sits inside the business at any moment.

FY26: debtors at 42 days, inventory at 69 days — roughly 2.3 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of 31 days, tighter than FY21's 41.

The full loop: cash goes out to suppliers and production on day 0; stock waits 69 days to sell; customers pay about 42 days after that; and suppliers themselves are paid at 80 days — netting out to the 31-day cycle.

In money terms: at FY26 sales of ₹3,821 Cr, each day of the cycle holds about ₹10.5 Cr — so the 31-day loop keeps roughly ₹325 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹2,556 Cr over the last 3 fiscal years against ₹478 Cr of depreciation — the company is building well ahead of wear-and-tear. Capital work-in-progress stands at ₹32.0 Cr (FY26) — capacity paid for but not yet earning.

The synthesis: the cash is going into capacity, not disappearing into the cycle — the question becomes whether the new capacity earns.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Sheela Foam Ltd earns a ROCE of 6% in FY26. That is up from a trough of 4% in FY25. Return on invested capital clears the cost of that capital by −6.4 percentage points, so growth here is not yet paying for the capital it uses. The wiring behind it is 4.2% net margin on 0.75× asset turns.

FY26 ROCE is 6%, recovered from a FY25 trough of 4% — the full ladder below shows the fall and the climb, undoctored.

🚨 Why the return is what it is — the wiring (FY26): 4.2% net margin × 0.75× asset turns × 1.57× balance-sheet leverage ≈ 4.9% on equity. Margin does its share; leverage is modest — this is an earned return, not a borrowed one.

The capstone test — ROIC − WACC: 5.6% − 12.0% = a −6.4 pp spread. The 12.0% is a standing assumption for the cost of capital in India, not a per-stock estimate — read the sign and the size of the spread, not the decimals. Negative — growth at these returns destroys value until the returns recover.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

Sheela Foam Ltd carries total debt of ₹908 Cr against shareholder equity of ₹3,260 Cr as of Mar 26, a debt-to-equity of 0.28 — effectively unlevered. On the annual view that ratio went from 0.33 in FY22 to 0.28 in FY26. The returns elsewhere on this page are therefore earned rather than borrowed.

Why this happened. Interest expense has been a material PAT headwind since the Kurlon acquisition. At peak debt of Rs 1,493 crore, annualised interest was approximately Rs 120-140 crore. As borrowings fall to a guided Rs 600-700 crore consolidated by FY27, finance costs are guided at Rs 50 crore — a Rs 70-90 crore reduction that flows directly to PAT. Debt repayment is funded by operating cash flow (OCF of Rs 409 crore in FY26) rather than asset sales, confirming operational self-funding. This driver is mechanical and does not depend on market conditions once the OCF profile holds.

Mar 26: total debt of ₹908 Cr against shareholder equity of ₹3,260 Cr — a debt-to-equity of 0.28. On the annual view, debt-to-equity went from 0.33 (FY22) to 0.28 (FY26). The returns on this page are earned, not borrowed.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions cut 4.9 points of Sheela Foam Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 18.5% of the company. Foreign institutions moved −2.2 points over the same window, to 4.2%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: −4.9 points over 8 quarters to 18.5%; Foreign institutions: −2.2 points over 8 quarters to 4.2%; Promoters: −0.1 points over 8 quarters to 65.4%.

🚨 Why the register moved: domestic institutions drove it (−4.9 points), alongside foreign institutions (−2.2 points) — distribution into the market’s bid.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Sheela Foam Ltd: the Z-score is not available for this stock, so we say so rather than invent one. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure. The debt, cash-flow and return sections above carry the balance-sheet evidence this page does hold, and each of them states its own reporting date.

The safety line in one sentence: the Z-score is not available for this stock, so we say so rather than invent one.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Sheela Foam Ltd trades at 37.6× P/E, near the bottom of its own range — cheaper only 11% of the time. Its long-run median P/E is 55.2×, measured across 9.7 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 37.6× is near the bottom of its own range — cheaper only 11% of the time, against a long-run median of 55.2× measured over 9.7 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +77.9% against a +4.1% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 5y, of the −9.7%/yr price move, ~−4.1%/yr came from earnings growth and ~−5.6 pp from the multiple (compressing). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is low against its own past, so the story rests on the earnings line underneath it, not the multiple.

What the price assumes This reading works the multiple backwards. It asks one question: what yearly rate of profit growth is a buyer at the market price already paying for? The number is the growth rate that makes eleven years of profit — six years growing, then five fading — add up to that day's market price, once each year is discounted at 11% a year.

At its price on 20 July 2026, Sheela Foam Ltd was priced for profit growth of about 30.3% a year. Profit itself has compounded 4.4% a year over the past 10 years. The market pays that at 37.6× P/E, the 11th percentile of its own 10-year range.

What the two numbers say together. The multiple is low against its own past, and the growth the price is paying for is far above what this company has actually delivered. Both readings sit on the same earnings, so they are one reading rather than two. A multiple that looks low because earnings fell is not the same thing as a low bar to clear.

How to hold this number: it is a reading of one day's price, taken on 20 July 2026, not a running figure. A higher price is paying for more growth and a lower price for less, so it moves whenever the price does, and this page does not restate it between measurements. Every other number on this page is read off the live quote.

Stage: Turning around Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Sheela Foam Ltd reads as turning around on its fundamental arc. Turning around — EPS growth swung from −69.7% at the trough to +280.7%, a 3-quarter improving streak, ROCE holding at 6.0%. The read is built from 12 quarters across 4 curves, on partial evidence.

Why it matters: growth inflections are where re-ratings start — the curves say a turn is forming, so the question becomes whether the next quarters confirm it.

The latest quarter’s profit carries a one-off item larger than the operating base, so the profit curve is shown but does not vote in the stage call.

Return readings here are annual, not quarterly — read as level and direction only; they can confirm the growth curves but never drive the stage on their own.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

71.8/100 — rank 1 of 2 in Mattress · 94% evidence confidence

Sheela Foam Ltd scores 71.8 out of 100 against the 2 companies it is compared with in Mattress, ranking 1. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 31.7 + 6.9 + 13.2 + 20 = 71.8. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Said versus delivered

What Sheela Foam Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

Kurlon Integration Completion Status Changed · 5 August 2026. In Feb 2026, management said the Kurlon merger was complete in all respects, and in May 2026 said the acquisition had moved beyond integration. In Aug 2026, management instead described integration as only 96-97% complete, with 15-20% of synergies still being realized, without reconciling whether the earlier statements referred only to legal completion or why operating integration remains incomplete.

ROCE Baseline Is Unreconciled · 5 August 2026. In May 2026, management reported an adjusted ROCE of approximately 18% after excluding the intangible portion of the Kurlon investment. In Aug 2026, management said current ROCE was approximately 10% without identifying a changed calculation basis, creating a material discrepancy in the profitability baseline used to assess returns and model the 20-25% target.

Q1 Raw-Material Margin Impact Exceeded Prior Expectation · 5 August 2026. In May 2026, management expected no material Q1 or Q2 impact from higher raw-material prices, allowing for only a limited 50-100 basis-point effect from volatility. In Aug 2026, management said volatility and inventory exposure affected margins in Q1, representing a materially different outcome from the prior pass-through and inventory-matching expectation.

Furlenco Q4 FY26 Profit Reversal · 15 May 2026. The Nov 2025 call cited Rs. 2 crores per month PBT/PAT run rate for Furlenco, and the Feb 2026 call confirmed a 9-month FY26 PAT of Rs. 18 crores, establishing a consistent upward trajectory. However, the latest call reports full year FY26 PAT at approximately Rs. 16 crores, which arithmetically implies Q4 FY26 was a loss quarter of approximately Rs. 2 crores - a sharp reversal of the prior trend that management does not acknowledge or explain in the latest call.

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions