Sheela Foam Q2 FY27 Results (NSE: SFL)
Signal: Margin pressure
The read
The trajectory remains growth-positive but margin-sensitive: Q2 revenue reached ₹1,045 crore, up 19% YoY, while EBITDA stayed flat at ₹87 crore and margin fell to 8.3% as raw-material inflation and brand investment absorbed growth; H1 EBITDA nevertheless rose 23% to ₹200 crore, extending the recent margin-recovery arc but requiring evidence of pass-through in volumes and margins.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹1,045 Cr | +19% | N/A |
| Net profit | ₹46 Cr | +360% (4.7x) | |
| EPS | ₹8.3 | N/A | |
| EBIT margin | 8.3% |
P&L walk
Revenue increased 19% YoY to ₹1,045 crore, but operating EBITDA remained flat at ₹87 crore as sharp polyol and TDI inflation and higher brand investment absorbed the benefit of growth; PAT rose 4.7x to ₹46 crore, aided by lower finance costs and depreciation.
Segments
Foam was the faster-growing business, with value up 26% and volume down 5%, versus mattress value growth of 8% and volume decline of 3%; the gap indicates foam led reported growth through pricing and mix rather than volume.
Key positives
- Revenue increased 19% YoY to ₹1,045 crore, marking the third consecutive quarter above ₹1,000 crore according to the company.
- H1 operating EBITDA rose 23% YoY to ₹200 crore despite sharp polyol and TDI inflation.
- Value growth exceeded volume growth in both categories: mattress value grew 8% versus volume decline of 3%, while foam value grew 26% versus volume decline of 5%, indicating price or mix support.
- H1 brand.com e-commerce sales increased 59% YoY and U20 sales increased 41% YoY, supporting the direct and premium-channel trajectory.
Key concerns
- Q2 operating EBITDA was flat at ₹87 crore despite 19% revenue growth, with EBITDA margin declining to 8.3% from an implied 9.9% a year earlier.
- Mattress volume declined 3% and foam volume declined 5%, leaving growth dependent on price increases and mix while the festive season shifted into Q3.
- Higher raw-material costs and brand investment absorbed the quarter's revenue growth, so sustained margin recovery remains unproven in Q2.
- PAT rose 4.7x to ₹46 crore while operating EBITDA was flat, with the company attributing the improvement partly to lower finance costs and depreciation.
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