Shares of Sheela Foam Ltd. surged 20% to hit an intraday high of ₹628.30 on the National Stock Exchange on Wednesday, February 4, following the company's exceptional Q3 results. According to Upstox, the stock witnessed higher than usual trading activity with trading volume surging 20 times to 25.37 lakh shares compared with an average of 1.27 lakh shares. On the BSE, shares touched an intraday high of ₹629.50 amid spike in trading activity. The positive market reaction came immediately following the announcement of the company's third quarter earnings results, with shares trading 15% higher at ₹602 as of 11:45 am, outperforming the NIFTY Microcap 250 index which was up 0.72%. The stock has declined 30.9% over the past year, making this recent surge particularly significant for investors.
The company delivered exceptional financial results across all key parameters in Q3. As reported by Upstox, Sheela Foam reported standalone net profit of ₹39 crore in Q3FY26, marking an increase of 129% from ₹17 crore in the same period last year. The company's revenue from operations rose 8% to ₹842 crore in the October-December period from ₹781 crore in the year-ago period. Additionally, EBITDA also known as operating profit rose 31% to ₹85 crore and EBITDA margin improved by 180 basis points to 10.10%. The gains were attributed to robust volume expansion in mattress and foam segments, with mattress registering volume growth of 11% and the foam segment growing by 20% during the quarter. According to the latest reports, consolidated revenues for Q3 FY26 grew by 11% year-on-year to ₹1,074 crore, with core EBITDA surging 39% YoY to ₹117 crore and EBITDA margins expanding by 220 basis points to 10.9%.
The company demonstrated strong operational efficiency with significant margin improvements. According to Upstox, Sheela Foam's EBITDA margins improved by 180 basis points to 10.10% during the quarter. The company's core business segments showed robust growth, with mattress volume growing 11% and the foam value segment growing 20% in Q3. The company's ability to translate this top-line growth into a threefold net profit increase highlights operational improvements and potential synergies from the Kurlon acquisition. As per the latest results, core EBITDA margins expanded by 220 basis points from 8.7% in Q3 FY25 to 10.9% in Q3 FY26, attributed to both incremental sales and improved gross margins.
The company is leveraging high-potential growth channels with exceptional e-commerce performance. As reported by CNBC TV18, e-commerce volumes surged 138% on the company's own website and 39% on other platforms in the first nine months of FY26. The 'U20' segment also showed robust expansion, demonstrating the company's ability to capture emerging market opportunities. The Kurlon acquisition is expected to yield further tangible benefits, driving operational efficiencies and market share gains across India, Australia, and Spain. Management remains confident in delivering sustained, profitable growth across these key markets, with Chairman & Managing Director Mr. Rahul Gautam expressing strong optimism that the Kurlon acquisition is "beginning to deliver tangible benefits" and driving "a turnaround" at Sheela Foam. According to Upstox, Gautam stated that "Profitability and cash generation have continued to improve sequentially each quarter, supported by improved performance across all key markets - India, Australia, and Spain."
While Q3 results were exceptional, the nine-month performance reveals underlying challenges. According to the latest reports, standalone revenue for the nine-month period grew 6.93% YoY to ₹2,143.07 crore, but PAT declined 30.42% YoY to ₹55.05 crore. Similarly, consolidated revenue increased 6.99% YoY to ₹2,770.78 crore, while consolidated PAT decreased 9.60% YoY to ₹69.08 crore. A significant concern is the current ratios for both standalone (0.64x) and consolidated (0.69x) operations are below 1, suggesting tight working capital management and potential reliance on short-term funding. This working capital tightness requires close monitoring, as it could signal underlying pressures that the strong Q3 performance has temporarily masked. The absence of management guidance for future performance makes it difficult to gauge future expectations and growth drivers.
