Buy Sheela Foam, target price Rs 3900: ICICI Securities

ICICI Securities has buy call on Sheela Foam with a target price of Rs 3900. The current market price of Sheela Foam is Rs 3151.35. Time period given by analyst is one year when Sheela Foam Ltd. price can reach defined target.

Sheela Foam Ltd., incorporated in the year 1971, is a Mid Cap company (having a market cap of Rs 15425.12 Crore) operating in Consumer Durables sector.

Sheela Foam Ltd. key Products/Revenue Segments include PU Foam Sheets/Mattresses/Rolls/Bolster/Pillows etc., PU Foam/Spring/Coir Mattresses etc. and Scrap for the year ending 31-Mar-2021.


Financials
For the quarter ended 31-12-2021, the company reported a Consolidated Total Income of Rs 909.01 Crore, up 13.14 % from last quarter Total Income of Rs 803.47 Crore and up 8.01 % from last year same quarter Total Income of Rs 841.58 Crore. Company reported net profit after tax of Rs 67.35 Crore in latest quarter.

Investment Rationale
The brokerage cuts earnings estimate by 26-19% for FY23-24E; modelling revenue / EBITDA / PAT CAGR of 15% / 35% / 36% over FY22-24E. It maintains BUY with a DCF-based revised target price of Rs3,900 (Rs4,000 earlier). Key downside risks are (1) adverse movement in prices of key inputs and (2) increase in competition from global players/Indian e-commerce.

Promoter/FII Holdings
Promoters held 72.95 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.53 per cent, DIIs 23.37 per cent.