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Sheela Foam has announced that its IPO will open for subscription on 29 November. Sheela Foam IPO price band has been fixed in the range of INR680 – 730 per share and the offer entails sale of shares worth nearly INR510 crore. Applications can be made in multiples of 20 shares. The Ghaziabad-based company is the leading player in India’s mattress market and sells its products under the Sleepwell brand name. It claims to have more than 20% share in the organized market.
Sheela Foam IPO will purely be a sale by existing shareholders and all the shares will be offered by Polyflex Marketing which is one of the promoters of the company. As a result, Sheela Foam will not receive any proceeds from the upcoming IPO. Polyflex Marketing owns 13,537,674 shares or nearly 27.75% equity stake in Sheela Foam. The company is led by Rahul Gautam (more about him and the family’s political connection here) who is also a promoter.
Apart from the home comfort business, Sheela Foam is into manufacturing and selling PU Foam to industrial clients to make a wide array of products including auto parts, reticulated foams utilised in filtration systems, ultra-violet stable foams used for the manufacture of garments, shoes and innerwear, and technical foams that are used in industrial sound absorption systems. The home comfort business accounted for nearly 65.6% of the company’s top line in FY2016 while the technical and PU foam business contributed the rest.
Strong financial performance but market on weak ground
In the latest FY, the company posted a profit of INR104.8 crore on revenues of INR1,566.8 crore, resulting in a net profit margin of 6.7%. Given the strong brand name of Sleepwell, the company has been recording higher revenues in the last four years while its profits have also grown in each of the last three years. Despite its strong financial performance, it may be a good time to bring fresh IPOs as the stock markets are dwindling amid heavy FII selling. Following not so great listing of Varun Beverages, another IPO of GreenSignal Bio Pharma is struggling as QIBs are avoiding it and retail investors are cancelling their applications. GreenSignal Bio Pharma has extended the IPO dates twice and has managed to get only 20% subscription in QIB category against the 75% reserved.
Get more details about Sheela Foam IPO at our discussion page. As always, IPO Central will analyze and publish its review of the offer in the coming days to figure out if Sheela Foam IPO price band is too high.