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ICICI Securities Report
Sheela Foam Ltd.'s Q1 FY23 revenue print continued to be weak. While overall margins were also weak, there was some sequential improvement (gross margin print is ~10% below from pre-Covid levels).
India branded volumes are 11% below June 2019 volumes. While raw material inflation does not appear to be an incremental worry, there are some near-term headwinds in few segments.
While some uptick from auto segment is expected, the furniture segment demand is slightly sluggish. Australia continues to trend well while Spain business is weak.
Our positive stance on Sheela Foam is based on the long-term opportunities which also embellish the narrative –
benefit from China plus strategy of buyers in the U.S., Europe,
opportunity in furniture cushioning and manufacturing (under SleepX brand),
sustained acceleration in India business growth (competitive edge through 5,000 pluse exclusive brand outlet network),
consumers realising importance of good quality mattress and
focus on growing e-commerce channel.
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