Sheela Foam's Acquisition Of Kurlon, Furlenco Positive For Stakeholders, Says ICICI Securities

BQ Prime’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer BQ Prime’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .ICICI Securities Report.Sheela Foam Ltd. has acquired 94.66% and 35% of Kurlon Enterprises and House of Kieraya (Furlenco) at Rs 20.4 billion (implied normalised FY23 price-to-sales multiple of 1.5 times versus four times P/S of Sheela) and Rs 3 billion (implied FY23 P/S multiple of 5.6 times), respectively. This acquisition is positive for the stakeholders of Sheela Foam: Sheela Foam’s market share in South and East India has room for improvement (versus North and West India where it enjoys ~40% market share). Given, Kurlon is number two player in South India with ~40% revenue share, this deal is likely to augment Sheela’s overall market share in mattress segment from current 20-25% to 35- 40%. Business economics of Kurlon are attractive (at 7.2% pre-Covid net margin versus 7.5% for Sheela,and shall be largely earnings per share accretive to Sheela Foam (assuming normalised margins).Renewed focus shall help Kurlon to claw-back market share loss (to Duroflex) in South India led by efficient execution, distribution expansion and higher support towards brand promotion.Robust distribution network (Sheela has higher presence in exclusive brand outlets while Kurlon has higher presence in multi brand outlets) and production efficiencies (better servicing of customers) and cost savings (reduced cost to serve and manufacturing cost) are the synergies expected by the management.Acquisition of Furlenco (digital first brand in fast growing branded furniture category) is likely to drive footfalls to EBOs through introducing complementary product portfolio (branded furniture) in their EBOs, in our view. We await further clarity on rationale and synergies of these acquisitions..Click on the attachment to read the full report:.Polycab Q1 Result Review - Strong B2B Demand; Model Strong Growth Momentum In FY24-25: ICICI Securities.DISCLAIMERThis report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Sheela Foam's Acquisition Of Kurlon, Furlenco Positive For Stakeholders, Says ICICI Securities

Sheela Foam has acquired 94.66% and 35% of Kurlon Enterprises and House of Kieraya (Furlenco) at Rs 20.4 billion.

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Sheela Foam's Acquisition Of Kurlon, Furlenco Positive For Stakeholders, Says ICICI Securities

Sheela Foam has acquired 94.66% and 35% of Kurlon Enterprises and House of Kieraya (Furlenco) at Rs 20.4 billion.

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