ISSUE DETAILS
ISSUE OPENS /
CLOSES ON
|
29-11/01-12-2016
|
ISSUE SIZE / OFS
|
75,00,000 EQUITY
SHARES
|
FACE VALUE
|
RS 5
|
PRICE BAND
|
RS 680-730
|
BUSINESS
|
Mfrs / exporters of mattresses and comfort
accessories / foam / lamination
|
PROMOTERS
|
SHEELA GAUTAM,
RAHUL GAUTAM
|
LISTINGS
|
BSE, NSE
|
BRLMs
|
ICICI SEC,
EDELWEISS FINANCIAL SEVICES
|
REGISTRAR
|
LINK IN TIME
|
IPO GRADE
|
NA
|
BUSINESS:
Sheela
Foam is one of the leading manufacturers of mattresses and technical PU Foam in
the country. Currently it owns and operates 11 manufacturing facilities.
Sheela Foam sells mattresses under the brand ‘Sleepwell’.
Sheela
Foam has developed a pan-India distribution network that consists of over 100
exclusive distributors, over 2,000 exclusive retail dealers and over 2,500
multi-brand outlets, as on September 30, 2016. The home comfort products are
sold to retail end-consumers through exclusive distributors.
OBJECTS
OF THE OFFER:
The
objects of the Offer are to achieve the benefits of listing the Equity Shares
on the Stock Exchanges.
The
company will be offering up to 75 lac shares (at the lower end of the IPO).
FINANCIALS:
(RS IN CRORES)
|
31-03-2015
|
31-03-2016
|
30-09-2016
(6 Months)
|
CAPITAL
|
16.26
|
16.26
|
24.39
|
REVENUES / TOTAL INCOME
|
1428
|
1567
|
804
|
NET PROFIT
|
43
|
105
|
66
|
EPS
|
8.75
|
21.48
|
13.52
|
RONW (%)
|
17
|
31
|
16
|
RISKS:
1. Demonetization effect: Slowdown in the real estate sector will affect the performance of the
company.
2.
Risks associated with the single product / segment.
3. Change
in customer preferences / needs.
4.
Increasing debtors’ level - For the Fiscal Year 2016 and the six months ended
September 30, 2016, the trade receivables were Rs 117 cr and Rs 134 cr
respectively, which constituted 7.47% and 16.65%, respectively, of the total
revenues for the same periods.
5.
Fluctuation in currency – Certain grades of polyols are imported.
6. The
company had delayed payments of statutory dues in the past.
7. Faces
stiff competition both from the organised and unorganized players in the market
— Kurl-on, Duroflex and Coirfoam besides a few international brands.
STRENGTHS:
1. Well recognized and
established brand.
2. Extensive and well
developed pan-India sales and distribution network.
3. Quality manufacturing
capabilities.
4. Integrated operations and
economies of scale.
VALUATION
AND RECOMMENDATIONS:
The
offer is around 27PE, based FY 17 earnings, which is reasonable. However one
should take the earnings of the previous year and current year with a pinch of
salt. The net profit margin which was at 3% in FY15 has gone to 6.7% in FY 16
and well beyond 8 percent in the current financial year. BRLMs have to clarify
for this kind of jack up of margins in the IPO bound year. Debtors levels are
have gone up substantially in the last 12-15 months indicating either ‘manufactured
sales’ or less demand for the products.
According to
CRISIL the organised market in mattresses in India constitutes around 35 per
cent of the total market and is growing at a faster pace, thanks to increasing
preference for branded products among consumers. Sleepwell holds 20-23 per cent
market share in the organised segment.
Considering
high percentage of promoters holding, (post IPO the promoters will hold around 70 percent), there could be
listing gains.
INVEST FOR
LISTING GAINS.
