Sheela Foam Limited

Consumer Cyclical — Furnishings, Fixtures & Appliances · NSE

₹616.40+₹11.30 (+1.87%)

DalalBaazaar Score

48 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Low

Driven by short-term liabilities exceed short-term assets, small-cap size, which brings sharper price swings.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Sheela Foam Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sheela Foam Limited engages in the manufacture and sale of polyurethane foams and mattresses in India and internationally.

IndustryFurnishings, Fixtures & Appliances

SectorConsumer Cyclical

Employees3,300

Annual revenue₹3,813 Cr

How does it make money?

Turns over ₹3,813 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 3,300 employees supports ₹1.16 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin12.2%

Net margin4.2%

Revenue / employee₹1.16 Cr

Who are its competitors?

The closest listed comparisons in its industry are HAVELLS INDIA LIMITED, VOLTAS LTD, TITAN COMPANY LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

HAVELLS INDIA LIMITEDP/E 43.5x · ROE 17.1%

VOLTAS LTDP/E 75.8x · ROE 7.0%

TITAN COMPANY LIMITEDP/E 68.5x · ROE 36.7%

What is its competitive advantage?Little sign of one

Returns on capital of 7.6% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE7.6%

ROE4.9%

Peer median ROE17.1%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 10.2% and earnings to grow about 20.4% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+10.2%

Est. earnings growth+20.4%

Analysts1

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +33% while net margin moved -40% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+33%

Margin effect-40%

DalalBaazaar Score

48/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 7.6% is below 10% — capital is not working hard
✗ ROCE has fallen by 6.9 points — returns are eroding
• EBITDA margin of 12.2% is respectable
✗ Net margin of 5.3% is slim
• Revenue has compounded at 10.0% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

43/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

70/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

31.4x

3Y Median

52.4x

40 monthly readings · mean 55.9x · range 35.6x–95.9x

Sector Median

68.5x

median of 3 sector peers

🟢Current valuation is approximately 40% below its 3y median of 52.4x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 54% below the peer median of 68.5x.

vs. its own history

Cheap

52.4x median over 40 months · -40%

vs. sector peers

Cheap

68.5x median of 3 peers · -54%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

31.4x

P/B

2.07x

EV/EBITDA

16.4x

PEG

—

Dividend Yield

0.16%

What's Good / What's Bad

🟢 What's Going Well4

Cash generation is improving
Free cash flow is up 4484% over 3 years.
Valuation below its historical average
At 31.4x the stock trades 40% below its own median of 52.4x.
Very low debt
Debt/Equity of 0.28x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Debt is rising
Total debt is up 59% over 3 years — worth checking what it funded.
Return on equity is falling
ROE has dropped from 12.4% to 4.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 14.5% to 7.6% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 57% against revenue growth of 33% — customers are taking longer to pay.
Short-term liquidity is tight
Current ratio of 0.76 — near-term obligations exceed near-term assets.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 59% over 3 years, from ₹571 Cr to ₹908 Cr.
🟡Receivables growing faster than salesFinancial
Receivables up 57% against revenue up 33% — sales are being booked faster than they are collected.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.76 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 40% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 54% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹272 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 57% against revenue up 33%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 12.4% to 4.9%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 10%✓ 12.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 2.9x
How much operating profit can fall before interest stops being comfortably covered.
3Revenue growth stays above 7% a year✓ 10.0% CAGR
Latest reported year was 25.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Free cash flow remains positive✓ ₹272 Cr
Profit that never becomes cash eventually stops being profit.
5Debt / EBITDA stays below 2x✓ 2.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 4 neutral · 2 weak

Market Cap

₹6,731 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

31.4x

Fair

Fairly valued against the generic band

P/B Ratio

2.07x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹19.6

Profitable

Profitable on a per-share basis

ROE

4.9%

Weak

Weak capital efficiency

ROCE

7.6%

Weak

Low return on total capital employed

Debt/Equity

0.28x

Low

Conservative leverage

Revenue Growth (YoY)

25.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

726.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.16%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹272 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹616.4

P/E (Forward)

21.8x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

7.3%

Average

Average margins

Net Margin

5.3%

Average

Average bottom-line conversion

Current Ratio

0.76

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.25

Defensive

Steadier than the market

52W Range Position

42%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

625.5 / 650.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

41.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,868 Cr	₹2,978 Cr	₹3,425 Cr	₹3,813 Cr	+10.0%
EBITDA	₹373 Cr	₹350 Cr	₹290 Cr	₹465 Cr	+7.6%
EBITDA Margin	13.0%	11.8%	8.5%	12.2%	—
PAT (Net Profit)	₹199 Cr	₹182 Cr	₹89 Cr	₹160 Cr	-7.1%
EPS	₹20.39	₹17.66	₹8.17	₹14.59	-10.6%
ROE	12.4%	6.2%	3.0%	4.9%	—
ROCE	14.5%	7.7%	5.7%	7.6%	—
Total Debt	₹571 Cr	₹1,493 Cr	₹1,462 Cr	₹908 Cr	+16.7%
Free Cash Flow	₹6 Cr	-₹1,943 Cr	₹101 Cr	₹272 Cr	+257.9%

🟢 Revenue has grown at 10.0% a year over 3 years.

🟢 EBITDA has grown at 7.6% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 12.2% over 3 years.

🔴 PAT (Net Profit) has shrunk at 7.1% a year over 3 years.

🔴 EPS has shrunk at 10.6% a year over 3 years.

🔴 ROE has fallen from 12.4% to 4.9% over 3 years (-7.5 pts).

🔴 ROCE has fallen from 14.5% to 7.6% over 3 years (-6.9 pts).

🔴 Total Debt has grown at 16.7% a year over 3 years.

🟢 Free Cash Flow has grown at 257.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹5,117 Cr

Total Liabilities

₹1,857 Cr

Total Debt

₹908 Cr

Cash & Equivalents

₹33 Cr

Operating Cash Flow

₹409 Cr

Capex

-₹137 Cr

Shareholding (proxy)

Institutional Holding

18.0%

Insider Holding

65.4%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

09 Jul 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 1 Sell

Target Price (Mean)

₹760

+23.3% vs CMP

Target Range

₹700 – ₹820

Peer Comparison

Company	P/E	ROE
HAVELLS INDIA LIMITED	43.5x	17.1%
VOLTAS LTD	75.8x	7.0%
TITAN COMPANY LIMITED	68.5x	36.7%

Recent News

2 positive1 mixed3 general

SFL Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Sheela Foam: Margins recovered, debt falling, stock lagging

Value Research, 26 May

Getting In Cheap On Sheela Foam Limited (NSE:SFL) Might Be Difficult

Simply Wall Street, 11 Feb

Earnings call transcript: Sheela Foam posts record Q1 2026 revenue, margin gains

Investing.com, 05 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Sleepwell mattress maker Sheela Foam hits 20% upper circuit after strong Q4 results, dividend announcement

Upstox, 14 MayCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Is Sheela Foam the Best Stock in Its Sector? A Look at the Numbers

Univest, 07 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🔴Business QualityWeak7.5/20

🟡Financial HealthAdequate11.9/20

🔴GrowthWeak7.7/20

🔴ProfitabilityWeak5.8/15

🟡ValuationFair9.5/15

🟡RiskModerate6/10

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 10%12.2%
✗Interest cover stays above 3x2.9x
✓Revenue growth stays above 7% a year10.0% CAGR
✓Free cash flow remains positive₹272 Cr
✓Debt / EBITDA stays below 2x2.0x