Sheela Foam (SFL) Q3 25/26 earnings summary

Executive summary

• Completed Kurl-on merger and full operational integration, driving a significant turnaround and margin expansion, with consolidated core EBITDA margins for Indian operations at 10% for the last 9 months, matching pre-acquisition levels.

• Consolidated revenue grew 7% year-over-year to INR 2,771 crore for 9 months, with Q3 FY26 revenue up 11% YoY to INR 1,074 crore; core EBITDA up 34% and margin at 10.6% for 9 months.

• Mattress volumes grew 11% YoY for 9 months, foam volumes up 12% YoY; e-commerce revenues surged 53% YoY to INR 180 crore for 9 months, and U2O segment turnover reached INR 75 crore.

• International businesses in Australia and Spain showed turnaround, with Q3 EBITDA margins at 12% and 9-month average at 10%; profitability improved in both markets.

• Furlenco, supported by fresh capital infusion, reached an annualized revenue run rate of INR 400 crore and delivered INR 18 crore PAT in 9 months; equity stake reduced to 34.53% due to new share issuance.

Financial highlights

• Standalone revenue for 9 months increased 6% YoY to INR 2,143 crore; Q3 standalone revenue was ₹841.64 crore, up from ₹780.69 crore in Q2 and ₹666.80 crore in Q3 FY25.

• Core consolidated EBITDA margin at 10.9% for Q3, up 220 bps YoY; 9-month core EBITDA at 10.6%, up 213 bps.

• Q3 consolidated PAT at INR 53 crore, tripling YoY; 9-month PAT at INR 69 crore; cash PAT for 9 months at INR 209 crore, with cash EPS of INR 19 per share.

• Gross margin improved to 43.5% (consolidated) and 42.7% (standalone) for 9 months.

• Basic EPS for Q3 FY26 was ₹3.54 standalone and ₹4.77 consolidated; diluted EPS for 9 months at 6.25.

Outlook and guidance

• Targeting 15% revenue growth and 15% EBITDA margin for India business over the medium term, with consolidated margins expected at 14-14.5%.

• Margin improvement expected from further synergy realization and price increases; full impact of recent price hikes (4-5%) to be seen in Q4.

• Targeting ~700 new showrooms in FY26, with 607 already launched in 9 months; continued focus on high-margin products and expanding e-commerce and retail presence.

• Maintenance CapEx projected at 30-40% of total CapEx, with total annual CapEx at INR 125 crore (INR 100 crore India, INR 25 crore overseas).

• Management is evaluating the impact of new Indian labour codes, but expects no material effect.