SFL Q3 FY26 earnings call.
A source-linked concall view: reported numbers, management language, guidance, commitments and risks that should carry forward.
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Revenue
₹1,074 Cr
verified against source
Revenue YoY
7%
reported change
EBITDA
₹117 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Sheela Foam delivered a strong Q3 FY26 with consolidated revenue of ₹2,771 crore (up 7% YoY) and EBITDA margin expansion of 220bps to 10.9%, driven by Kurlon integration synergies and volume growth. Mattress volumes grew 11% YoY while foam volumes surged 20% in Q3. The Kurlon turnaround is complete, with India business margins firmly in double-digits at 10% for 9 months. E-commerce grew 53% YoY to ₹180 crore run-rate. International operations (Australia and Spain) achieved ~12% EBIT margins in Q3. Management reiterated its medium-term target of 15% revenue growth and 14-15% EBITDA margins by FY28, with 30-40 crore of remaining Kurlon synergies to be realized. Asset monetization of ₹100-125 crore has reduced debt, with net debt now below ₹650 crore. Key risks include raw material price volatility (TDI supply disruption causing temporary spike) and intensifying competition in the organized mattress segment. Price increases of 4-5% have been implemented to counter input cost inflation.
Colored figures show movement against the previous available record.
Guidance to track
- Management targets 15% revenue growth for India business over the medium term, with the journey currently underway and visibility improving. The target applies to the India business including Kurlon, technical foams, and intermediate grades.
- Management expects margins to reach 14-15% EBITDA by FY28, with somewhere between current margins and 15% in FY27. The journey to 15% margins is ongoing with continuous improvement through synergies.
- The remaining synergy target of ₹30-40 crore from Kurlon acquisition (towards total ₹250 crore) is on track. A new machine for material production is arriving and will be installed by mid-quarter, with full impact in Q1 FY27.
- Australia and Spain operations are expected to sustain approximately 12% EBIT margins going forward, up from 10% for 9 months, driven by cost discipline and operational efficiencies.
Risks flagged
- One major supplier (GNFC) had a plant shutdown causing TDI prices to spike from ₹210/kg to over ₹240/kg. Management expects the plant to resume by February 20th and prices to stabilize. This could impact Q4 margins if sustained.
- While competitors rationalizing pricing was anticipated as listing pressures mount, management acknowledged competitive activity remains unchanged. Analysts questioned whether rivals are matching price hikes; management expects more disciplined market behavior going forward.
- The main competitor in Australia appears to be seeking an exit, creating market share opportunities but also potential consolidation scenarios. Management stated they are 'not close' to selling but watching the situation, as the competitor's complex business may attract buyers.
- Management admitted 'no crystal clarity' on the format or strategy for the 24 company-owned stores inherited from Kurlon. While currently profitable with positive contribution margin, the evolving format limits predictability of retail expansion ROI.
Key quotes
- Kurlon has emerged as a significant turnaround for the group. Prior to Kuron acquisition, SFL on a consolidated basis was at an EBITDA margin between 10 to 11%. At the time of acquisition, Kuron's EBITDA was in the mid single digit. We have continuously improved Kuron's operations and have achieved a consolidated core EBITDA of the combined Indian operations of 10% for the last 9 months.
- We are continuously working to enhance our growth rate to 15%. Now very difficult to commit the quarter on which it will be achieved but we will try to achieve earlier than later. As far as the margins are concerned we would be reaching around 14-15% in FY28 but somewhere in between the current margins and 15% in the next year.
- The net debt levels in India is less than 300 crores and overseas is around 325 to 350 crores. Total net debt at a consolidated level should be somewhere between 600 to 650 crores excluding lease capitalization.
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