Sheela Foam – Low Expectations, High Execution Stakes | Delivery is the Key - FY25 Margins down. Credibility dented. But FY26 is the test, if guidance holds, a rerating path opens. - Here’s why FY26 could be Sheela Foam’s bounce-back year ⤵️ 1️⃣ What Went Wrong in FY25? 🔹Kurlon integration brought higher debt & inefficiencies 🔹₹35 Cr one-time loss from obsolete Kurlon inventory 🔹Interest cost tripled due to acquisition loan 🔹Shift to small towns & online = lower pricing power 🔹Depreciation rose from full-year consolidation 🗣 Amit Kumar Gupta, Group CFO “The integration of Kurlon led to additional costs and inefficiencies… margins were impacted by one-offs and elevated overheads.” 2️⃣ Numbers That Hurt – FY25 vs YoY 🔹Revenue: ₹3,439 Cr ( +15%) 🔹EBITDA: ₹286 Cr (-5%) 🔹Net Profit: ₹97 Cr (-47%) 🔹EBITDA Margin: 8.3% 🔹PAT Margin: 2.8% 🗣 “Despite volume growth and synergy execution, bottom-line lagged due to sectoral headwinds and financing cost.” 3️⃣ Why FY26 Could Be Different ? 🔹₹250 Cr in cost savings fully executed 🔹Manufacturing footprint streamlined: 18 → 12 units 🔹Lower overheads through admin & freight optimization 🔹 ₹200 Cr asset monetization targeted to cut debt 🔹Interest cost to drop from ₹100 Cr → ₹10-15 Cr 🔹Margin levers now operational, not aspirational 🗣 “We’ve executed major cost savings. FY26 will reflect full synergy benefits.” 4️⃣ FY26 Management Guidance 🔹15% revenue CAGR over next 2-3 years 🔹EBITDA margin target: 13-14% (vs 8.3%) 🔹Aim to become net debt-free in 2-3 years 🔹Growth from premium SKUs, rural expansion, ecommerce 🗣 “Our target is 13-14% EBITDA margin. We’re confident FY26 will show significant improvement.” 5️⃣ Growth Triggers in Motion 🔹1,000+ new EBOs planned in FY26 🔹Rural brand Tarang: 7% of volumes → aiming for 12-15% 🔹Ecommerce revenue: ₹175-200 Cr; targeting 60-80% growth 🔹Furlenco now profitable (ARR ₹300 Cr) 🔹STAQO (IT arm): ₹50 Cr revenue with 28% EBITDA margin 🗣 “Retail and digital levers are scaling up. FY26 is about growth with margin discipline.” 6️⃣ Final Take – From Pain to Pivot 🔹FY25 = Cost drag, execution lag 🔹FY26 = Margin reset, deleveraging trigger 🔹FY27 = Potential re-rating if guidance is met 🗣 “The worst is behind us. FY26 will show what the integrated Sheela Foam can really deliver.” 🧭 Investor Compass View - This isn’t about flashy growth. - It’s about profitable recovery. - If margin guidance plays out, Sheela Foam may wake up as a rerating story 💡 From pain to pivot, Sheela’s re-rating depends on delivery, not promises.