Brokerage Emkay Global Financial Services has initiated coverage on mattress maker and marketer Sheela Foam Ltd. with a ‘buy' rating and a target price of Rs 1,751.
The Gautam family-promoted company has significant opportunities to leverage its brand, improving its market share further from the current share of 23 percent, Emkay Global said in a media statement on Wednesday. The continued strategy of the mattress marketer towards building brand dominance in home comfort products segment such as mattresses and bedding materials augers well for the company, it added.
The Indian mattress market provides huge opportunity for branded players to take share from the unorganised segment since 64 percent of the market is fragmented, With the rollout of Goods and Services Tax, this process will speed up, and Sheela Foam's nationwide presence will help it further.
The company's revenue is expected to increase at a compound annual growth rate of 18 percent between financial year 2016-17 and FY19, backed by consumer shift to branded products from unorganised market, Emkay Global said
The earnings per share of the company, which owns the Sleepwell brand, is likely to post a CAGR of 34 percent through March 2019, supported by revenue growth and EBITDA margin expansion, the brokerage added.
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