Sheela Foam Ltd. is optimistic about restoring its margins to normalised levels in the early months of FY26, driven by its efforts to manage its e-commerce operations more efficiently, according to the company’s Executive Chairman Rahul Gautam.
Sheela Foam registered an Ebitda margin of 8.4% in the nine months ending December 2024, which was the lowest ever for the company.
Talking to NDTV Profit, Gautam said that Sheela Foam is working on its e-commerce business to ensure that margins normalise.
“We are working on ensuring that the margins return as far as e-commerce is concerned. One small example that I’ll give you is e-commerce is fraught with returns. Either a customer orders and doesn’t take it and kind of comes back, or there are returns because people are just used to that 100 nights free,” he said.
The margins will normalise within the next two months, according to the top executive.
“We are learning how to handle that. It’s just a question of a bit of a learning curve, but otherwise, we will be on track with margins in the next two months or so,” Gautam said.
The top executive explained the factors impacting margins during the fiscal year, noting that one of the key reasons was the slower-than-expected integration of the business.
“This impact on the margin is primarily because of two reasons. Number one, the integration process has been a little slower than what we anticipated it to be,” he said.
The other impact came from its e-commerce business, which has a small margin for the company.
“Now e-commerce was the first one to take off, but it happened quickly, and that’s why we see extremely large growth on the mattress side. Now, e-commerce is a smaller margin business, and our aim was first to get hold of the market and then keep expanding on the margins as we kind of go along,” Gautam said.
“So that’s primarily the reason that it has happened, but it’s just a process that’s been followed,” he added.
Sheela Foams also expects the share of its e-commerce business to stabilise in the long run, once the offline mattress sale kicks in, its executive chairman said.
“The company’s share of the e-commerce part has increased a lot and will continue to increase for another month or month and a half. However, by that time, the offline or the traditional mattress market will also be kicking in. So as a percentage, probably it will kind of stabilise,” Gautam mentioned.
Sheela Foam reported a 10% year-on-year increase in its Q3 revenue at Rs 967 crore. However, net profit fell by 39%, dropping to Rs 18.8 crore from Rs 30.8 crore in the same period last fiscal.
Shares of Sheela Foam Ltd. tanked 3.7% on the NSE on Tuesday to clock an intraday low of Rs 871.45 apiece. The stock was down at Rs 878 per share at 1:26 pm, while benchmark Nifty 50 was up 1.2% at 23,640.80 points.
. Read more on Business by NDTV Profit.Sheela Foam registered an Ebitda margin of 8.4% in the nine months that ended December 2024, which was the lowest ever registered in nine months. Read MoreBusiness, Markets
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