Stellar debut for Sheela Foam; shares zoom 41% over issue price

By: | Published: December 10, 2016 6:35 AM

The R510-crore initial public offering was a pure offer for sale by Polyflex Marketing Private

Mattress manufacturing firm Sheela Foam made a strong debut on the bourses on Friday with the stock surging nearly 41% to close at Rs 1,032 apiece. The stock listed at R860, a premium of over 18% to the issue price of Rs 730. Post listing, the stock commands a market capitalisation of Rs 5,034 crore. The Rs 510-crore initial public offering (IPO) was a pure offer for sale (OFS) by Polyflex Marketing Private. The issue was subscribed 4.15 times.

Commenting on the occasion, Ajay Saraf of ICICI Securities, said, “Sheela Foam is a company which has been part of this growth story for many years and the stellar listing of its IPO is a testament that there is appetite among investors for good issuances irrespective of the market conditions.”

The company manufacturers mattresses under the brand name of Sleepwell. Sheela Foam is also engaged in manufacturing other foam-based home comfort products which are targeted primarily at Indian retail consumers, as well as technical grades of polyurethane foam (PU Foam). The company manufactures PU Foam in Australia through their wholly owned subsidiary, Joyce Foam.

For the year ending March 2016, the company reported a 9.7% increase in its total income at Rs 1,566 crore from the previous year’s Rs 1,428.2 crore. During the same period, profit after tax (PAT) was up almost 146% at R104.7 crore from the previous year’s Rs42 crore. Sheela Foam ended FY16 with total expenses of Rs 1,414 crore, up around 3% from previous year’s R1,370.7 crore.

Sheela Foam has 11 manufacturing facilities in India and 5 facilities in Australia. As on September 2016, the company has a distribution network of over 100 distributors, over 2,000 retail dealers and over 2,500 multi-brand outlets. Edelweiss Financial Services and ICICI Securities were the book running lead managers (BRLMs) to the offer.

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