Sheela Foam Aims to Bounce Back in FY26
Sheela Foam Ltd., a leading mattress maker, is [[optimistic]] about restoring its profit margins to normal levels in the early months of FY26. Executive Chairman Rahul Gautam shared this positive outlook in a recent interview. The company has been working on improving its e-commerce operations to boost margins.
E-commerce Challenges and Margin Recovery
Sheela Foam faced its lowest ever Ebitda margin of 8.4% in the nine months ending December 2024. Gautam explained that the company is tackling challenges related to e-commerce returns, such as customers refusing deliveries or taking advantage of trial periods and then returning the products. He assured that these issues are being addressed, and margins are expected to normalize within the next two months. “We are learning how to handle that,” Gautam stated, emphasizing that the company is on a learning curve but expects to be back on track soon.
Integration and E-commerce Impact
Gautam shed light on the factors impacting margins during the fiscal year. He pointed out that the integration process of a recent business acquisition has been slower than anticipated. Additionally, the rapid growth of the e-commerce business, while positive in terms of market share, initially came with smaller margins. The company’s strategy was to capture market share first and then focus on improving margins. “Now e-commerce was the first one to take off… and that’s why we see extremely large growth on the mattress side,” Gautam explained. He added that e-commerce, being a smaller margin business initially, required a strategic approach to market penetration.
E-commerce Share to Stabilize
Gautam also expects the share of its e-commerce business to stabilize in the long run. He predicts further growth in online sales for the next month or so, after which the offline market will also pick up. This balance between online and offline sales is expected to stabilize the overall share of e-commerce.
Financial Performance
Sheela Foam reported a 10% year-on-year increase in its Q3 revenue at Rs 967 crore. However, net profit fell by 39%, dropping to Rs 18.8 crore from Rs 30.8 crore in the same period last fiscal. Following this news, shares of Sheela Foam Ltd. saw a dip on the NSE on Tuesday. While the stock experienced a decline, the benchmark Nifty 50 showed an upward trend. The company’s focus on addressing e-commerce challenges and improving margins will be key to its performance in FY26.
Looking Ahead
Sheela Foam’s optimism, coupled with its proactive approach to managing e-commerce operations, positions it for a potential rebound in the coming months. The company’s focus on balancing online and offline sales, along with addressing integration challenges, will be crucial for its success in FY26. Investors and market analysts will be closely watching the company’s progress in achieving its margin targets.