Sheela Foam (SFL) Q3 24/25 earnings summary

Executive summary

• Achieved strong topline and profitability growth in Q3 and 9M FY25, with consolidated Q3 EBITDA margin nearing double digits and robust B2C mattress volume growth at 24% YoY.

• E-commerce and rural initiatives, including Tarang and Aaram brands, drove significant growth, making the company the second largest online mattress brand in India.

• Integration of Kurlon acquisition is in final stages, with accounting closure expected within the financial year.

• International business share declined as focus shifted to India, but Australia and Spain subsidiaries showed mixed performance and recovery.

• Furlenco expanded its subscriber base, entered new cities, and the company increased its stake to 43.89%.

Financial highlights

• Q3 FY25 consolidated revenue rose to INR 967.11 crore, up 10% YoY; EBITDA at INR 88 crore (+15% YoY); net profit at INR 18.59 crore, down from INR 31.17 crore in Q3 FY24.

• Standalone Q3 revenue at INR 791 crore, up 54% YoY; EBITDA at INR 71 crore (+34% YoY); net profit at INR 25 crore, down 19% YoY.

• 9M FY25 consolidated revenue at INR 2,590 crore (+21% YoY); EBITDA at INR 217 crore (-1% YoY); net profit at INR 75 crore, down 37% YoY.

• Gross margin for Q3 FY25 consolidated at 40.6%; India business at 39.7%; Australia at 52.8%; Spain at 29.8%.

• Total comprehensive loss for Q3 FY25 was INR 5.24 crore, mainly due to exchange differences on foreign operations.

Outlook and guidance

• India mattress business expected to grow 18%-19% annually over the next 2-3 years, with EBITDA margins around 15%.

• B2B segment anticipated to grow 8%-10% with consolidated EBITDA margins targeted at 12%-14% in three years.

• Long-term EBITDA margin target for India business is 14%-15% by 2027.

• Price hikes of 3%-5% announced for mattresses, effective February.

• Ongoing amalgamation schemes are subject to regulatory approvals and have not yet been accounted for in the financials.