SFL margin slips 2.59 points as costs outpace revenue
Management cited sharp increases in polyol, TDI and freight costs, while consolidated net profit fell 25.54% sequentially.
Filed 02 Nov 2026, 19:17 IST · after market close · Sheela Foam Ltd (SFL)
Key takeaways
- Consolidated operating margin fell 2.59 percentage points sequentially as expenses grew 4.20% against revenue growth of 1.27%.
- Other income contributed 45.92% of consolidated profit before tax, while the tax rate fell 4.19 percentage points and softened the net-profit decline.
- SFL's 7.96% operating margin was 4.78 percentage points below the 12.74% median for 145 Consumer Discretionary peers.
Price around the results
Revenue barely grew, but operating profit fell 23.62%
SFL's consolidated revenue grew 1.27% sequentially, but operating profit fell 23.62% as the cost base expanded faster. Net profit declined 25.54% to Rs 46.42 cr, despite interest falling 1.91%. Other income accounted for 45.92% of profit before tax, making reported earnings less reflective of operating profit.
Raw-material and freight inflation drove the margin squeeze
Expenses rose 4.20% sequentially against 1.27% revenue growth, narrowing operating margin by 2.59 percentage points to 7.96%. Management said polyol prices rose 65%, TDI prices rose 33% and raw-material availability was constrained. The company also said shipping freight costs increased 300%, while crude oil rose 50% and reduced affordability.
Margin remains below peers after a sequential decline
The 7.96% consolidated operating margin was below the 12.74% median among 145 Consumer Discretionary peers that had reported the quarter, a gap of 4.78 percentage points. This was the second available quarter in the trend, with margin falling from 10.55% in Q1FY27. The lower tax rate, at 20.43% versus 24.62% in Q1FY27, partly cushioned the decline in profit after tax.
Technical foam and cushioning volumes improved sequentially
Management said standalone technical foam volume grew 13% sequentially and furniture cushioning volume grew 21%, even as standalone mattress volume fell 3% year on year and standalone foam volume fell 5%. The company said it launched GSF with a mega scheme and that Furlenco became an SFL subsidiary effective 1 October 2026. Management also said a 30 KLD sewage treatment plant is planned at Gwalior and set FY30 targets of 39 KL per person for water-consumption intensity and 13% for waste.
Results were filed after market close
SFL filed the consolidated Q2FY27 results after market close on 2 November 2026. The filing therefore does not include a post-results share-price response.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ |
|---|---|---|---|
| Revenue | ₹1,045 cr | ₹1,032 cr | +1.27% |
| Other income | ₹27 cr | ₹26 cr | +5.06% |
| Expenses | ₹962 cr | ₹923 cr | +4.20% |
| Operating profit | ₹83 cr | ₹109 cr | -23.62% |
| Operating margin (%) | 7.96% | 10.55% | — |
| Interest | ₹17 cr | ₹18 cr | -1.91% |
| Depreciation | ₹34 cr | ₹34 cr | +0.80% |
| Profit before tax | ₹58 cr | ₹83 cr | -29.46% |
| Tax | ₹12 cr | ₹20 cr | -41.45% |
| Net profit | ₹46 cr | ₹62 cr | -25.54% |
| EPS (₹) | ₹4.24 | ₹5.63 | -24.69% |
Operating margin of 7.96% compares with a Consumer Discretionary sector median of 12.74% across 145 peers that have reported Q2FY27.
What management said
From the company’s own investor presentation. Each point is checked against the source document before it appears here.
This quarter
- Standalone technical foam volume grew 13% quarter on quarter in Q2 FY27.
- Standalone furniture cushioning volume grew 21% quarter on quarter in Q2 FY27.
Guidance & outlook
- SFL targets water consumption intensity of 39 KL per person by FY30.
- SFL targets waste of 13% by FY30.
Expansion
- Furlenco became an SFL subsidiary effective October 1, 2026.
- A new 30 KLD sewage treatment plant is planned at Gwalior.
New products
- SFL launched GSF with a mega scheme.
New initiatives
- SFL plans to reuse polythene for packaging and use EPR for polythene-waste disposal.
Problems & risks
- Polyol prices rose 65%, TDI prices rose 33%, and raw-material unavailability affected SFL.
- Crude oil rose 50%, reducing affordability.
- Shipping freight costs increased by 300%.
- Standalone mattress volume declined 3% year on year in Q2 FY27.
- Standalone foam volume declined 5% year on year in Q2 FY27.
What to watch
- Whether consolidated operating margin recovers from 7.96% after the 2.59-percentage-point sequential decline.
- Whether expense growth moves below the 4.20% sequential rate while revenue growth remains above 1.27%.
- Whether other income's 45.92% contribution to profit before tax declines in the next quarter.