- 18 May 2023
- ICICI Securities
SHEELA FOAM REPORTS WEAK Q4 NUMBERS
SFL - 663 Change: 13.95 (2.15 %)News: Consolidated revenue declined by 4.5% YoY to Rs 729 crore. Geographically, revenue from within India grew by ~3% YoY to ~Rs 485 crore, however revenue from outside India declined by ~8% YoY to ~Rs 244 crore. On the margin front, the gross margin improved by 196 bps YoY to ~39.4% (down 285 bps QoQ). EBITDA margin improved by 121 bps YoY (up 135 bps QoQ) to 10.6% supported by lower other expenses. PAT declined by ~9% YoY to ~Rs 45 crore in Q4FY23 tracking weak topline growth and higher interest outgo (up ~3x YoY).
Views: We believe that Sheela Foam's topline growth was impacted due to subdued demand especially on the international front. Uncertain geopolitical situation in Europe has affected the revenue growth of company's subsidiary in Spain. On the domestic front, we believe, lower discretionary spend has restricted the topline growth. On the margin front, gross margin at 39.4% is lower than company's pre-covid gross margin of ~45%. Despite lower gross margin, EBITDA margin at 10.6% is in line with company's pre-covid margin range of 10-12%. We await management commentary on demand recovery and sustainable margin outlook, going forward.
Impact: Negative