Sham Foam Limited

Consumer Cyclical — Furnishings, Fixtures & Appliances · BSE

₹87.00−₹0.74 (−0.84%)

DalalBaazaar Score

69 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with both sales and profits growing well. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:53 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sham Foam Limited manufactures and distributes polyurethane foam mattresses and other allied home comfort products. Its products include mattresses, pillows, furniture-cushions, cushions as well as PU foam cores utilised for manufacturing finished home comfort products.

IndustryFurnishings, Fixtures & Appliances

SectorConsumer Cyclical

Employees85

Annual revenue₹92 Cr

How does it make money?

Turns over ₹92 Cr a year. Of every ₹100 of sales, about ₹9 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 85 employees supports ₹1.09 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.09 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.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 42.1% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE17.1%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +16% while net margin moved +974% 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+16%

Margin effect+974%

DalalBaazaar Score

69/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

75/ 100

Good

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

Valuation

79/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

11.6x

Sector Median

68.5x

median of 3 sector peers

🟢Against its sector it trades 83% below the peer median of 68.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

68.5x median of 3 peers · -83%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

8.7x

PEG

0.09

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 1.7% to 12.0% over 3 years.
Debt is being paid down
Total debt is down 78% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on capital is rising
ROCE has improved from 9.0% to 42.1%.
High return on capital employed
ROCE of 42.1% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.19x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Receivables growing faster than salesFinancial
Receivables up 73% against revenue up 16% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 45% against revenue up 16% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 42.1% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 1.7% to 12.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 78% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 83% 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 ₹12 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 73% against revenue up 16%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 5.0% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro 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%✓ 12.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✓ 5.0% CAGR
Latest reported year was 13.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹12 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 39%✓ 42.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 10 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

Price history

Quick Metrics

8 good · 3 neutral · 0 weak

Market Cap

₹100 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.6x

Cheap

Cheap against the generic band

P/B Ratio

3.45x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹7.52

Profitable

Profitable on a per-share basis

ROE

51.5%

Strong

Strong capital efficiency

ROCE

42.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.19x

Low

Conservative leverage

Revenue Growth (YoY)

13.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

141.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹10 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

ROA

16.1%

Good

Assets are working hard

Operating Margin

13.1%

Average

Average margins

Net Margin

9.4%

Average

Average bottom-line conversion

Current Ratio

1.77

Comfortable

Healthy short-term liquidity

52W Range Position

61%

Mid-range

Technical Snapshot

RSI (14)

45.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹80 Cr	₹74 Cr	₹81 Cr	₹92 Cr	+5.0%
EBITDA	₹1 Cr	₹5 Cr	₹5 Cr	₹11 Cr	+99.8%
EBITDA Margin	1.7%	6.1%	6.4%	12.0%	—
PAT (Net Profit)	₹1 Cr	₹3 Cr	₹4 Cr	₹9 Cr	+131.6%
EPS	₹0.61	₹2.58	₹3.12	—	—
ROE	40.8%	33.4%	28.7%	41.0%	—
ROCE	9.0%	21.2%	21.1%	42.1%	—
Total Debt	₹18 Cr	₹10 Cr	₹9 Cr	₹4 Cr	-39.9%
Free Cash Flow	-₹4 Cr	₹7 Cr	-₹0 Cr	₹12 Cr	—

🟢 Revenue has grown at 5.0% a year over 3 years.

🟢 EBITDA has grown at 99.8% a year over 3 years.

🟢 EBITDA Margin has risen from 1.7% to 12.0% over 3 years (+10.3 pts).

🟢 PAT (Net Profit) has grown at 131.6% a year over 3 years.

🟡 ROE has held roughly flat at 41.0% over 3 years.

🟢 ROCE has risen from 9.0% to 42.1% over 3 years (+33.1 pts).

🟢 Total Debt has shrunk at 39.9% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹4 Cr to ₹12 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹49 Cr

Total Liabilities

₹28 Cr

Cash & Equivalents

₹8 Cr

Operating Cash Flow

₹13 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

73.5%

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 mixed4 general

Sham Foam Ltd. IPO Review - Sham Foam Ltd. IPO Dates, Issue Price, Subscription and Allotment Status

The Economic Times, 13 Oct

Compare with

Equitymaster, 16 Oct

Sham Foam Share Price fall: streak and valuation

Univest, 30 SeptPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Sham Foam Limited Share Price

Upstox, 18 Aug

Sham Foam shares to list today: Check GMP ahead of BSE SME debut

The Economic Times, 18 Aug

Sham Foam SME IPO listing: Shares debut at 20% discount, hit lower circuit; details here

Livemint, 18 AugPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

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

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑