Sheela Foam Limited (NSE: SFL) Q3 2026 Earnings Call dated Feb. 04, 2026
Corporate Participants:
Rahul Gautam — Chairman and Managing Director
Amit Kumar Gupta — Chief Financial Officer
Analysts:
Unidentified Participant
Raghav Maheshwari — Analyst
Ravi Purohit — Analyst
Bhavan Rupani — Analyst
Rahul Agarwal — Analyst
Rishi Modi — Analyst
Pranav Doshi — Analyst
Viral Shah — Analyst
Presentation:
operator
Good evening ladies and gentlemen. Madam, I am Madhuri, moderator for the conference call. Welcome to the Sheila Foam Ltd. Q3FY26 investors call. As a reminder, all participants will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call please signal an operator by pressing star and then zero on a touchstone telephone. Please note this conference is being recorded. I would now like to hand over the floor to Mr. Gulshan. Thank you. And over to you sir.
Unidentified Participant
Yeah. Thank you ma’. Am. Good evening and very warm welcome to everyone. On a behalf of Sunidy Securities I welcome you all to a sila form Limited Q3FY26 earning conference call. Today we have with us a management represented by Mr. Rahul Gautam, Chairman and Managing Director, Mr. Rakesh Sir, Deputy Managing Director and Mr. Amit Kumar Gupta, our Group CFO. We thanks Sila Foam for giving us the opportunity to host the call. I would now like to hand over the floor to the management for their opening remark post which we will open the floor for a Q A.
Thanks.
Rahul Gautam — Chairman and Managing Director
And over to you Rahul sir. Thank you Gulshan and thank you Madhavi. Good afternoon ladies and gentlemen. At the outset let me thank you all for attending this conference call to discuss our operational and financial results for Q3 and for the nine months ending December 25th. I do hope you’ve gone through the results and the earning presentation which has been uploaded on our website. I’m pleased to inform you that the murder of Kurlon is now complete in all respects with all requisite filings duly made with the Registrar of Companies. Curlon has emerged as a significant turnaround for the group.
Prior to Curlon acquisition, SFL in a consolidated on a consolidated basis was at an ebitda margin between 10 to 11%. At the time of acquisition, Kerlon’s EBITDA was in the mid single digit. We have continuously improved Kerlon’s operations and have achieved a consolidated core EBITDA of the combined Indian operations of 10% for the last nine months. Which is completely in line with SFL margins of pre acquisition of Kerlon. This we achieved with a 7% plus top line growth and we will continue to focus on accelerating this growth going forward. The synergies and integration benefits realized through this acquisition have created a meaningful value for the company and we are confident that Curlon will continue to contribute positively to our long term growth and shareholder value.
Our India business core margins have remained firmly in the double digit range in Q3 and have been sustained consistently over 10% in the past nine months as well. This reinforces our confidence to sustain margins while driving growth. Our business segments have also shown remarkable growth this year. The volume growth for Mattresses has been 11% year on year for the nine month period. Value realization have also been almost at similar levels of 9% during this period with marginal impact of higher growth in the U2 segment which is the unorganized to organized segment which was erstwhile called as sti.
Price increases across Sleepwell and Curlon products were implemented towards the end of Q3 and we expect their full impact to get reflected in Q4. On the retail front, we added approximately 600 net new showrooms over the last nine months and remain on track to increase to approximately 700 showrooms by the end of the financial year. Gurlon showroom expansions, particularly in northern India continue to gain strong traction underscoring the brand’s consumer strength. In addition, we plan to operationalize select company owned company operated stores over the next six months to further gain some retail wisdom. Additionally, we are developing pillows as a focused growth area growth category within the home comfort segment and with collaborations which are underway.
Our E commerce business grew by 53% year on year over the last nine months reaching net revenues of around 180 crores for the nine month period driven by a focused strategy, targeted consumer marketing and portfolio expansion at value accretive price points. Our unorganized to organized business, the U2O which I had mentioned earlier formerly known as STI now operates through over 8,000 dealers in more than 5,000 towns in 24 states. The segment grew by nearly 100% over the last nine months reaching a turnover of 75 crores by end of December 25th and reaching a run rate of 120 crores supported by continued product innovation across mass value and economy.
Segments in foam volumes grew by approximately 20% year on year in Q3 FY26 and by 12% over the nine month period. Value growth stood at 12% in Q3 and 6% for nine months impacted by lower raw material prices compared to a similar period of last year. With input costs firming up and recent price increases in place, we expect value growth to be in line with volume growth in Q4. We are continuously expanding our customer pipeline by identifying, investing and developing new market opportunities to create a healthy sales pipeline. Overall, we remain confident in growth outlook of our India operations supported by strong brands, expanding distribution and a disciplined execution as we continue to focus on sustainability and profitability in the growth Turning to our International Business Our business in Dubai and the wider GCC region continues to progress in a steady and encouraging manner.
We are already present through exclusive retail stores across each of the Emirates providing us with a strong on ground foundation. In addition, we have entered into collaborations with leading local large format retail chains which will further deepen our presence across the GCC over the next three to six months. To support this growing footprint, we have taken deliberate steps to enhance the responsiveness of our supply chain. I am pleased to share that we have commenced local manufacturing which we have outsourced for the proprietary Celafoam and Curlon Sleep solutions through a partnership with a UAE based manufacturer.
These initiatives are already helping us reduce fulfillment timelines and improve service levels. Alongside our physical expansion. We have strengthened our digital and e commerce presence across platforms such as Amazon and Flipkart, Amazon and Noon.com and our own website which is also in full operation in Middle East. We remain focused on developing the GCC region into a meaningful and sustainable market guided by prudent execution and long term value creation. Turning over to Australia and Spain I am pleased to share that both Australia and Spain businesses have delivered a marked improvement and a clear turnaround in their performance.
During the third quarter EBITDA margins for both geographies were around 12% in Q3 and stood approximately 10% for the first nine months of the fiscal year. This improvement has been driven by disciplined execution across multiple levers. We have effectively leveraged our long standing supplier relationships in India diversified, sourcing from alternate and cost efficient markets and maintaining consistent oversight to keep fixed costs and operating overheads well controlled. In Australia, a focused effort on waste reduction has translated into tangible operational and financial gains. In Spain, improved pricing discipline and better sales realizations have supported the overall performance.
Together these outcomes reflect the commitment of our teams to build a resilient and sustainable international business. As I had shared with you in the previous quarter that Ferlenko had embarked on a Plan to raise 125 crores of equity to support its next phase of growth. I am pleased to inform you that this initiative received a very encouraging response from the investor community. Sheila Pom also infused rupees 30 crores alongside other esteemed investors. This confidence from from new investors putting fresh monies reinforced our belief in Ferlenko’s long term vision and strategy. This capital infusion would be sufficient to propel for Lenko to 500 to 550 crores top line.
Currently we are already moving at about a run rate of 400 crores per per annum. I’m also happy to share that Ferlenko continues to progress steadily on its growth journey as on date it is at an annualized revenue run rate of 400 which I just mentioned. For the first nine months of this fiscal, Ferlenko delivered a path of rupees 18 crores and generated cash profits of 68 crores which were reinvested for the growth of the business. Ferlenko has built a strong scalable online business model. However, in the Indian consumer landscape, an omni channel approach integrating both online and offline touchpoints has proven to be the most effective routes to scale.
Consumers typically begin their purchase journey online but prefer to visit physical stores to finalize decisions. As a result, leading digital first brands are now investing significant capital to establish offline presence. Srilenko enjoys a distinct strategic advantage through access to Sheilafoam’s extensive retail network. Together Silafoam and Furlanco have developed a structured program to establish Furlanco’s presence across large number of sleepwell and Curl on storage stores. This partnership enables Ferlenco to achieve a rapid capital efficient and diversified offline expansion, significantly accelerating its omnichannel growth. We remain deeply committed to building a sustainable and scalable business and keep leveraging across functional strength.
Stacco, our technology and digital solutions subsidiary, continues to grow and expand to play a critical role in strengthening enterprises IT analytics and digital capabilities across sectors. IT remained focused on platform consolidation, process automation and data led decision support for business. I’m pleased to share that till date it has been empowering more than 3 lakh subscribers on their enterprise solution presence. 360 we see Stacco as the key enabler of productivity gains and long term value creation for the Sheila group. Turning to our ESG initiatives, sustainability remains a core pillar of our long term strategy and we continue to make steady progress against our selected sustainable sustainable development goals.
We have operationalized a 500 kilowatt solar power plant at our Jabalpur facility and are in the process of installing an additional thousand kilowatts of renewable energy capacity across other locations. We have also commissioned a 30 kilowatt sewage treatment plant at Nandigram, reinforcing our commitment to responsible resource management. Equally important to us is our responsibility towards inclusive and sustainable social development. Our CSR efforts are anchored around two focus areas, emotional wellness and skill development. I am pleased to share that our skill development initiative has enabled and empowered nearly 64% of participating young men and women across various programs, helping them secure meaningful employment or start their own entrepreneurial ventures in the area of emotional wellness.
Our digital LED initiatives have reached over 562 million individuals complemented by approximately approximately 250 on ground workshops engaging more than 14,000 participants. These efforts reflect our belief that a long term value creation must go hand in hand with positive societal impact. I will now request our group CFO Amit to take you through our financial highlights over to Yomit.
Amit Kumar Gupta — Chief Financial Officer
Thank you sir. Thank you for your inputs on our business and strategy. Just to update on the financials, our volumes and profitability in Q3 and 9 months 26 as well are well on our anticipated growth category with a sustainable with sustainable margins. On a consolidated basis our revenue grew by 7% on a YoY basis from 2,590 crores to 2,771 crore and on a standalone basis our revenue saw a growth of 6% from 2013 crores to 2143 crores as already appraised by Rahul Ji. Our matrix volumes continue to grow by 11% for Q3 and 9 months.
Our foam volume saw substantial growth of 20% in Q3 and 12% for the 9 months. Our consolidated core EBITDA continues to be in double digit at 10.9% for Q3 expanding by 220 basis points yu wide growing from 84 crores to 117 crores. For the nine month ending December 25th core EBITDA stood at 10.6%. On a yoy basis it grew 34% from 219 crores to 293 crores resulting in margin expansion of around 200% 13 basis points. I am pleased to share that our Consolidated PAT for Q3 26 was reported at 53 crores, a substantial jump of 3 year 3x on a year on year basis.
Consequently, our 9 month PAT stands at 69 crores. This was due to higher profitability along with reduction of our interest cost in Q3 FY26 as we repaid our debt liabilities. Historically, our business has been a strong and consistent generator of cash. Following carlon acquisition our fixed asset base more than doubled resulting in higher depreciation charge and consequently a lower reported pat. However, this does not include reflect the underlying cash generating strength of the business. To provide a clear picture, our consolidated cash PAT which is defined as fat plus depreciation plus non cash taxes or deferred taxes stood at 209 crores for the last nine months translating into a cash EPS of approximately rupees 19 per share.
Additionally interest costs are declining meaningfully as acquisition related debt is being repaid which will further support improvement of reported debt going forward. With the uptick in raw material prices towards the end of the last quarter, along with price increases that we have taken in both mattress and foam segments, we expect additions to both revenue and profitability going forward. As part of asset monetization, we have recently sold the land parcel in Jagadia, Gujarat. Till date we have been able to garner a total of around 100 to 125 crores from asset monetization which has all gone to reduce our debt level.
With this, I request the moderator to open the floor for question and answer.
Questions and Answers:
operator
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press Star and one on a telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing Star and one again. Participants are kindly requested to restrict the two questions in the initial round. First question comes from Raghav Maheshwari from Kamitya Wealth Management. Please go ahead.
Raghav Maheshwari
Hi. Thanks for the opportunity. First of all, sir, congratulations on a great set of members. Sir, my first question is, is for the margin, are these margins sustainable going forward and what drove this uptick in the margins when we look at year on year?
Rahul Gautam
Amit.
Amit Kumar Gupta
Yeah. So we have been continuously improving margins for the last three quarters as we had been discussing in our earlier calls. Also the driver of these are two. One, improvement in our cost structure from the synergies that we had gained because of Carlon acquisition and secondly a growth in the top line. We have reached a 10% sort of a margin but our journey still continues and we hope that not only retention that we should be moving towards improving these margins in the quarters. Doing it.
Raghav Maheshwari
Okay sir, thank you. And sir, next question is regarding the mattress segment. Sir, I wanted to understand which which mattress segment are you seeing the most of the growth coming in? Like is it K or Aram or some other price segments.
Rahul Gautam
So it is coming both from on the offline which is Carlon is growing a bit faster because the nature of the business is MBO based. And also we have taken a drive on making showrooms for Carlon. So that has worked out well. And the second would be on the E. Com site where we have experienced good growth on the brand dot com. So there our growth have been upwards of 50%. And the last but not the least would be the U2O unorganized to organize. So there also we’ve experienced good growth. The accumulation of all this has resulted in the number growth.
Raghav Maheshwari
Okay, but I wanted to understand which price segment market is is seeing the most traction as of now in the. Current demand landscape though, our ASPs has gone up on the offline.
Rahul Gautam
So basically we are see there’s a. Different approach for the EBOS where we are driving the ASP. So ASPs have gone up both for Steeple and Carlon in offline and so so the numbers are going up on the higher side. This is the ASPs have gone up and as far as the e. Com is concerned, there also, there is a premiumization. Our ASP in the E Com has also gone up and has also gone up in U2O. So we are basically targeting a little higher premium in all these three segments.
Amit Kumar Gupta
So if I just add to what Ravish sir has said, the offline segment we are the median value is around 14, 15,000 and on the online segment is more like 9, 10,000. And for the growth to happen it will always be around the median numbers here. But the constant effort is to keep pushing that up and that’s what we will see in the coming times. You know that 15 going to a 16 and on the other side the 910 segment going to about 10, 11. Happening I think.
Raghav Maheshwari
Last number you’ll have to speak. It’s not coming through clearly. Just have to speak a little louder please.
Amit Kumar Gupta
Yeah, so this is about the rate.
Raghav Maheshwari
Increase that you were talking about in the initial note. What sort of impact are we going to see in Q4 numbers because of this rate increase? I mean, can you put it in percentage? Like how much percentage?
Amit Kumar Gupta
So I mean look, these price increases are not any phenomenal price increases. I generally take the inflation, which is, which is a low number and some raw material changes that come, but it’s of the order of between 4 to 5%.
Raghav Maheshwari
Okay, so there’s no major impact on.
Amit Kumar Gupta
Not really, no, no, no. And also please appreciate that as far as mattresses are concerned, anything of the order of this 5% or something like that is not a determining factor for somebody who is buying a mattress. You know, he looks at a range, he looks at a price point and around that 100, 200 rupees here and there. That is not impactful. But we are mindful of this. That price should be not exorbitant. They should be within the price segment that you are looking at. And at the same time we do account for the inflation that needs to be catered to.
Raghav Maheshwari
Okay, sir, those were my questions. All the best.
operator
Thank you sir. The next question comes from Ravi Purohit from securities Investment Management Private Limited. Please go ahead.
Ravi Purohit
Yeah, hi, thanks for taking my question. So now that you know the acquisition is done and I think is also done and we are seeing benefits, can you, can you just kind of share some thoughts on the combination of this Furlanco investment with Carlon and Sleepill? All of this put together how you kind of envisage our growth numbers over the next few years. And I think we had maintained or we had spoken about expansion in margins over the medium term. So do we kind of still stick to those ranges 13 to 15% EBITDA margin. So if you could just share some more insights.
And also you know Ferlanco, I think we have made further investments in the last one year. So what valuation have have we invested in Fernco and you know what’s our long term kind of plan on for Lanco?
Rahul Gautam
Amit.
Amit Kumar Gupta
Yeah, so you are right post pedal on acquisition we had talk to the investors and we set ourselves a target of 15% growth with a 15% EBITDA margin on which we have been sticking very strongly. That journey is currently underway. We are halfway towards it. Our target still remains the same and now we see it with a little bit more clarity than what we did the last quarter or the quarter before. So the visibility is now better. Secondly, on the valuation of Ferlenko, the recent issuance was done at a valuation of 1051050 crore for the company in which we participated to the extent of 30 crores and the remaining 95 crores were brought in by new investors which the company had got into the cap table.
Ravi Purohit
Okay, okay Amiti one clarification. So you know in our PNL we have this 180 crore annual amortization and depreciation. Right. And I think we have mentioned in the previous calls that we don’t need any further capex to invest. So how so can you just kind of help us understand how much is the typical maintenance capex that we will need to kind of spend every year. So this 180 crore depreciation and amortizing amount minus that maintenance capex effectively is the cash that comes back to the business.
Amit Kumar Gupta
Right.
Ravi Purohit
In terms of helps and deleveraging. So if you could just quantify and help us understand how much is maintenance capex that we expect to spend every year over the next few years. On the total.
Amit Kumar Gupta
Yeah. So you are right. We have capacity post Carlon coming into our fold. We have now capacity sufficient to take us to two And a half x of our current capacity except for certain debotter making capex which we might need to do here and there some improvement capex which we would always do which has a payback period of one and a half to two years. So there are always opportunities in the business and thereafter the maintenance capex. So with all these together we anticipate around 100 odd growth capex in India and around 25 odd crores overseas.
So a total of 125 watt crore including the efficiency and the debottlenecking capex maintenance capex should be around 30 to 40% of this.
Ravi Purohit
Okay, okay, okay, okay. And sir, I think we had mentioned in the last call that we had reduced our debt by about 400 odd crores in the first week of October. So subsequent to the sale of this land in Gujarat if you could just quantify how much has our debt dropped off between September on the 30th of September until date totally.
Amit Kumar Gupta
Yes, we pared our debt by around 400 crores because there were 400 crores of cash investment lying in our balance sheet. We had raised more capital capital at the time of Carlon acquisition because it was an acquisition equivalent of our size and we needed to keep cash on the balance sheet. But as Carlon stabilized that cash was no more usable and hence we used it to pay off the debt. So that in the first week of October which I mentioned in my last call as regards your second question. So Jagadia is we recently sold and we also sold two or three properties in Bangalore and around that area to together we have got a cash of around 100, 125 crores which has fully gone to pay our debt.
Now if you ask me what is the debt levels today I can tell you that the net debt levels in India is less than 300 crores and overseas is around 325 crores. 325 to 350. So the total net debt at a consolidated level should be somewhere between 600 to 650 growth including lease capitalization.
Ravi Purohit
Okay. Okay, great.
Ravi Purohit
Sir, congratulations once again on a good set of numbers and all the best for the future.
Amit Kumar Gupta
Thank you.
Rahul Gautam
Thank you.
operator
Thank you sir. The next question comes from Bhavan Rupani from Investec. Please go ahead.
Bhavan Rupani
Yeah. Hi sir, thank you so much for the opportunity. So now given we don’t have any major CAPEX plans in your term, any plans or thoughts to declare dividend.
Rahul Gautam
Good question. And we just finished a board meeting yesterday so I would say that definitely the whole process is being reviewed and obviously we’ll take a final call in our as the year gets over. But I mean I don’t know how much I can say. But let’s say our thoughts are very similar to yours.
Bhavan Rupani
All right. And given stock prices also corrected over past one year, would management ever look to buyback options? Any thoughts over here also would be really helpful.
Rahul Gautam
Okay. We have not given any thought to it as of now. Currently we were involved in improving the businesses and going forward though that will be our focus area. But we will let you know whenever any of these type of intent is. Discussed in the company. There was something in this budget also not buyback options.
Amit Kumar Gupta
Yes. So buyback is now treated as capital gains.
Rahul Gautam
It’s capital gains. Okay.
Bhavan Rupani
All right sir, my next question is on Aram and Tarang. Can you please share proportion of volume contribution which comes from this category for this quarter as well as last year. Q3.
Rahul Gautam
I think you’ll take that. This is but primary. Let’s stick to the last quarter.
Amit Kumar Gupta
No, so sorry. We have given an indication of how much this category has grown and what is the total value of this category. Beyond that we have not been sharing information as to volume number not because we can’t share but primarily because it becomes a more detailed information than led to every circular sort of an discussion which we don’t want to get into. So my request would be that we will continue to communicate the growth in these two areas and the amount that these two categories bring to us as revenue. But as regards volume, my suggestion would be that we look at a consolidated total mattress volume.
Bhavan Rupani
All right, fair point sir. And one more question on synergies. Of the total 2.5 billion of synergies that we have been talking about post Kerlon acquisition you had indicated almost 2 billion is already in the numbers and balance of 0.5 billion was to be reflected by Q4. So what’s the status over your and what is the incremental synergies still pending which can be reflected in future quarters going ahead?
Amit Kumar Gupta
So you are right and we are perfectly on track. 200 crores is what we had realized till the last quarter. In this quarter we had not forecasted because the remaining synergy of around 30 to 40 crores was primarily on account of the introduction of the new material and the setting up of the machinery which was already ordered from overseas. That machine is on the and almost on the phase of reaching our facilities and we hope to install it by the mid of this quarter. So you may see some results of that in the current quarter.
But full results would be available in the next, in the first quarter of the next financial year. However, all this will be done, implemented, executed and converted by the end of the current financial year.
Bhavan Rupani
Point, sir, last question. So you indicated our long term vision is for 15% revenue growth, 15% EBITDA margins, but would you like to give any guidance for FY27 and 28 on revenue and EBITDA margins?
Amit Kumar Gupta
So as far as growth rate is concerned, we are continuously working to enhance our growth rate to 15%. Now very difficult to commit the quarter on which it will be achieved, but we will try to achieve earlier than later. As far as the margins are concerned, as specified earlier, we would be reaching around 14, 15% in financial year 28, but somewhere in between the current margins and 15% in the next year.
Bhavan Rupani
All right, thank you so much, sir.
Amit Kumar Gupta
Thank you.
operator
Thank you, sir. The next question comes from Rahul Agarwal from AKJ Asset. Please go ahead.
Rahul Agarwal
Yeah, hi. Thank you so much and very good evening to all of you. Few questions got answered. So just to clarify, firstly, on the growth outlook, I still see some gap on volume and value growth for the mattress business as well as for the foam business. Any comments on how does it converge going forward? You obviously talked about price hikes, but should we assume that largely volume is going to be equal to value growth going forward? You know, let’s say next two years on foam and mattress separately.
Amit Kumar Gupta
So. As I mentioned, even if you see the average raw material price in 2425 was higher than what we have seen in 2526, around 15 to 20% in mattress, we don’t pass a lot that almost gets absorbed. And that’s why you see a parity between value and volume in the mattress segment. But in the foam segment it has to be passed off to the ultimate consumers, whichever category it is. Maybe. So there is a disparity between the volume and the value growth in the foam segment. The current increase in prices to some extent will offset that disparity. But we are still a little bit lower than the average price of 2425. So you may not see them exactly mapping up, but if the price goes up further in the next two, three months. Yes, it may, but and current prices, there would still be some gap though the gaps will be narrowed.
Rahul Agarwal
Just on the mattress side. I still see like a 7% value growth and 11% volume. So what, what, what explains that gap if we are not basically not shutting our selling price but our raw material price is lower?
Amit Kumar Gupta
No, it’s not. On Mattress it is 7% value growth. Mattress is around 9% value growth and 11 volume growth if I am correct.
Rahul Agarwal
Okay, so.
Amit Kumar Gupta
Yeah, so there is a 2% gap. See 1 or 2% gap monitoring is very difficult because even in the meta segment if you see there are matrices which are sold across the segments starting right from 4,000 rupees to 40,000, 60,000, 70,000 rupees. So it may happen at times that you sell a higher price mattress or a lower price mattress which may create a percent or two disparities. But and to some extent because the growth of our U2O segment and the online segment was higher than the offline segment, that also impacts the value and volume growth.
But empirically if you see on a year on year basis or even on a quarter on quarter basis, you will find that there is not much of a difference between the two. Because on one side There is a YouTube and E commerce segment and on the other side we are premiumizing our offline segment, even the E. Com segment, what Rahulji just mentioned. So the quantum of deterioration on the because of selling low price segment is offset by the premization of the higher segment. So 1 or 2% may be there but you won’t see a material difference between value and volume growth.
Rahul Agarwal
Got that, got that. And just in terms of overall consol revenue growth, right? I mean nine months, I believe on a consolidated basis we’ve grown about 7%, is that correct? On value basis, yes. Right. So I’ll just think, thinking when you guide for a 15% growth, you know, over a medium term, let’s say three years, are we talking about the same number like to like 7 to moving up to 15 or we’re talking about anything else here?
Amit Kumar Gupta
Yeah, we are talking about 7 to moving up to 15. So based on past year growth, suppose this year we land at X, the next year we anticipate it to be 1.15x.
Rahul Agarwal
Okay, okay, that clears the second question. On the cost side, a lot of line items in the PNL are flattening out on a YOY QOQ basis. You know, as you said, your margins also are expected to go up further from here on and there’s some bit of savings which are left to be benefited from starting from the new machines. But overall, how do you look at your cost items going into next two to three years? Will that reflect largely inflation growth going forward or is the company investing more into marketing advertisements, people? And that should also play out over the next two years.
Amit Kumar Gupta
Rahul, this is a function of what is the Growth that you achieve. So based on a 15% growth I can say that in fixed cost because in other costs there are both fixed and variable. In fixed cost it should be pure pure inflation plus minus 1 2%. On a variable cost it would not be fully proportional to the growth in revenue. But yes it will be higher than inflation. So you would see a mix sort of a back. For example if top line grows by 15% you should see a 2, 10% growth in the. In the.
Rahul Agarwal
Get it. So there is still some bit of up level what we are thinking in term when the growth goes to 15 maybe we’ll get that operating leverage benefit going into next two years. Right?
Amit Kumar Gupta
Yeah. So that will come one. But this is a very flexible sort of cost structure because we have marketing expenses here which are totally flexible. If the growth is not achieved we can always scale it back. So if the growth is say for example, which we don’t even want to say now the growth instead of 15% is say 10%. I think we should be able to retain our cost at around 6 to 7% growth. If you see our cost structure this year you would not see any inflation except for that impact of forex instrument. Our cost structure is more or less less flat as compared to last year.
So that flexibility our structure offers that in case things don’t turn out to be good you can always scale them back.
operator
Thank you sir. The next question comes from Rishi Modi from RDM advisory. Please go ahead.
Rishi Modi
Yeah hi. Am I audible?
Rahul Gautam
Yes please.
Rishi Modi
Yeah. So Amitji, first question for you. We’ve gotten a 16cr other income in this quarter. I remember last quarter you had guided that post the debt paydown. We’ll have some 7.8cr per quarter other income. So is there anything which is non recurring as a part of the 16cr?
Amit Kumar Gupta
So this 16cr has different components. Its wasted sale. There are some investments which in the first week of October there were. So some income from those investments then it is four, five heads are there. I would not see them as very volatile. This time it has been good 15.66 crore but yes it should range somewhere. It should not be 8, 9 crores. As I told last quarter there are certain improvements that we have done to this. So it should be in the 10 to 12 crore range.
Rishi Modi
Okay, got it. So we can pen down say 40 to 50 cr for the coming year at least on the other income piece.
Amit Kumar Gupta
Minimum you can do that.
Rishi Modi
Got it, Got it. Second on the raw material pricing and the price hike, subsequent price hike that we have taken like we’ve taken a 4% to 5% price hike as Rahulji mentioned right now and you’re not seeing an impact on the volumes yet. But has the market as a collective taken these price hikes, say the new age players, sleep company, Wakefit, Duroflex, all of these guys or it’s us who has led this price hike and others have. So on the mattress offline side, most of the brands including the regional players have taken price hike on the home side which is much quicker because there, there have been multiple price increases to offset the raw material increase online, where the online the price increase has not happened so far. So. So because online we are operating at a similar level and we are just waiting for some more visibility on the raw material before any action is taken. So right now online is the only one where the price increase has not been passed off. All right. And on the offline piece, the competitive intensity given, you know, now one of the players is listed and the other one is coming to listing and they would want to show profitability has that kind of reduced in your opinion or like they are rationalizing pricing or the competitive intensity still remains high on the discounting front.
Rahul Gautam
So I think that there is no change as such that they have reduced the competitive activity that is, that is there. But I think it will with some more time it will play out. I am assuming that we have also gone through that process that some, I mean discipline in terms of both top and bottom line does come in. So we are hoping that it will be more level playing field going forward.
Rishi Modi
Got it. And we haven’t vacated any price points. Last time I remember we’d vacated some price points which was exploited by competition. So our range still remains at almost every price point. Is that still the case?
Rishi Modi
Yes, yes, got it.
Rishi Modi
Tushar, I’m assuming you are leading the cocoa stores charge. So just if you could explain what are you all doing differently versus say a premium franchise owned, franchise operated store? Is this like a large experiential store and then the order flows through through the franchisee or the order comes directly to us. How are the unit economics looking for these cocoa stores?
Rahul Gautam
So this is Rahul answering this. So these cocoa stores were actually inherited, you know, with the Carlon transaction and they were almost about 40, 50 of them and then eventually close down a few and we are currently running 24 of them. The exact format of them is that they are a little bigger. They do sell mattresses which are both sleep well and Karnon and they also sell accessories which have. Should we call them as experienced stores? Probably not. Should we call them as large EBOs? Probably not because they also sell a sizable quantity of accessories.
I think this format is just evolving. We are going to address the issue, but at the moment there is no crystal clarity on exactly how we want to do it. But they are profitable, they make a positive beta and they are lending a lot of information and lot of experience which as a company or as an organization we are absorbing. So I think you should see more clarity on this in another quarter or another couple of months time.
Rishi Modi
Got it, Got it.
operator
Thank you sir. Participants are kindly requested to restrict with two questions in the initial round. And the next question comes from Pranav Doshi from Ardeco Asset Management. Please go ahead.
Pranav Doshi
Yeah, hi. Thank you for the opportunity and congratulations on a good set of numbers. So first of all on the international business, I just wanted to ask that let’s say in both Australia and Spain, our other expenses in absolute terms, they remained almost exactly the same while our revenue has increased. So let’s say going ahead, how do you look at the cost structure in these businesses and like what kind of a leverage do you expect going ahead? So is it a one off or can this sustain going forward?
Amit Kumar Gupta
So Pranav, there is lesser inflation in those countries, so costs don’t increase to that level. Our intent would be to restrict them as much as possible because you don’t see every year a 10, 15% growth there. Normal growth expectation would be around 5, 6 odd percent from both countries. So to maintain profitability our intent would be too restricted. But that being said, there are certain inflationary impacts. So you may see minor increases in overhead costs there.
Pranav Doshi
Okay, so then can we sustain the like 12, 12 and a half odd percent EBITDA margin that we’ve done in this quarter or is it at the higher end, would you say sir?
Amit Kumar Gupta
No, I would say that in overseas operations like even if you see the nine month average it is around 10 odd percent. So we anticipate it to be approximately 12% going forward.
Pranav Doshi
Okay. Okay, great. And just on our EPO strategy, so what would be the total number of EBOs that we are operating at as of Q3? FY26 as of the end of that. So, so the total number, if I put both the brands together and Carlon, so that total number would be close to 3800. So out of which majority is in C about 2900. And this I’m talking about the showroom format where we have a display, horizontal display and Carlon is about 900. The total about 3,800 is a showroom format there. Then we also have category exclusive dealers in Sleepwell which is a large number which is 2500. But these are small format retail which are dealing in multiple categories, handloom shops and also keeping a mattress of sleeping.
So they, these are classified as ebos who are. Who don’t have a display as such. They just stack the mattresses vertically of our brand.
Pranav Doshi
Right, right. So sir, my question was that. Let’s see one for Q2 in the presentation we had mentioned that we are operating 5,300 EBOs and I think that is the number that you’ve touched upon even today and even incrementally let’s say we were hoping to add 800 EBOs for the, for the year and now I think we are. You cut it down to 700. So like can you explain what is the strategy and why have we cut down our target and how are we looking at it?
Rahul Gautam
So we have. See as far as the people is concerned the right now the strategy is to expand the showroom format so both for people and for carlon. So we had taken a target like you rightly said about 800 and we are hopeful of closing at 700. And these will be all different formats, shopee format and a world gallery format For Karlon it will be home and corner. So this expansion is a. Is a key driver for growth because even now our penetration in terms of number of outlets is still not there where we want to be.
So at least for next three years I see this drive to continue on expansion.
Pranav Doshi
Okay.
operator
The next question comes from Rishi Modi from RDM advisory. Please go ahead.
Unidentified Participant
Yeah. Hi. Thank you for giving me the chance again. Rahulji, if I remembered correctly, you once mentioned that the Australia subsidiary of yours, given its kind of matured in growth and possibly on profitability, you were looking to exit or sell that business. Is that still in the plan or are we seeing something else there?
Rahul Gautam
Number one things on ground keep changing all the time. And since it’s not many companies that operate there, there are primarily three big people. One is us, the other is a main competitor and the third is a little smaller one. And then we have some three, four other very, very, very small people. The ground reality is changing for sure. So the main competitor is. It appears that he is wanting to exit. He had put up his business for sale about a year back, did not find any takers and it’s a bit of a complex business that he runs and it As I said, it is looking like that it’s shrinking.
So we are watching the situation. If it’s getting us a lot more business, both in terms of volume as well as in value, we may want to. But at the same time we have. I mean, are we close to the thought? Absolutely not. But this is a new angle to it or a new tangent to it, you know, which is there. So it gets profitable. It gets.
Pranav Doshi
Okay, it continues to grow. After all, we are heavily invested in there in two big plants which are there. So we’ll wait and watch on that. Okay, got it.
Rahul Gautam
But it is possible that somebody may kind of come along and wants to invest in that business, you know, which may be a larger business than what we run. So we’ll wait and watch that.
operator
Thank you, sir. The next question comes from Viral Shah from Enam Holding. Please go ahead.
Viral Shah
Yes, thank you for the opportunity, sir. So just a clarification to one of the previous questions. You mentioned 15% revenue growth and 15% EBITDA margin. So you mentioned this, this is on. A consolidated basis, right. And not just the Sheila foam and the colon branded business.
Amit Kumar Gupta
So just to clarify, this is India business. So over business. Yeah, because this is 80% of the business. So it may be, instead of 15%, it is 14, 14 and a half on a consolidated basis because overseas business could also be at 10, 12% sort of a level. But when we say 15, 15, it is India business because overseas business can’t grow at 15%.
Viral Shah
Okay, but when you say India business. You include the rest of the part. Of the business also which is the technical forms, intermediate grades and furniture, cleaning, everything. Exactly. So total. Okay, perfect, perfect. Okay, thank you for this clarification. So second is on the TDI and polyol prices. Can you just guide what are the. What were the per kg prices in. Q3 and how are they behaving currently?
Rahul Agarwal
So Q3 TDI was towards the end was at about 210 and currently also it is at the same level. But unfortunately one of the major suppliers to Indian market gnsc, they had a shutdown. So because of which the prices in the market has shot up because there is a, there is a supply gap, is there? So currently, currently it is people who are getting imports or getting some from GNFC that is still at about 210. Otherwise the market price is today upwards of 240. But this is a temporary phenomena. We are all hopeful that the plant will resume production by 20th of February and then I think they should be again stability.
Viral Shah
Sure, sure. And what Will the polyol prices be.
Rahul Gautam
Polyol is currently again, towards the end of quarter three, it was around 118, 120 at the port and today it is about 123, 24. So that’s, that’s. That’s the level it is operating today.
Viral Shah
Perfect. Great. Thank you so much.
operator
Thank you. Sir, the last question comes from Bhavan Rupani from Investec. Please go ahead.
Bhavan Rupani
Yeah. Hi. Thanks for the chance again, sir. Sir, on foam core and technical form, this segment has reported 27 and 20% volume growth in Q4. So how should one understand this? Can you throw some light over your reason behind Sharp jump over here?
Rahul Gautam
I think the market is of course large and growing. It’s a highly competitive part of the industry. We have, let’s say, I would say we have renewed or reviewed or focus on distribution and a few grades of foam, et cetera, which have made this growth possible. But these possibilities will always kind of exist or may present as an opportunity to you. And that’s part of it. But once this organization or reorganization has taken place, the growth should continue.
Bhavan Rupani
All right, that’s it, sir, thank you so much.
Amit Kumar Gupta
Thanks.
operator
Thank you, sir. There are no further questions. Now I hand over the floor to Mr. Rahul for closing comments.
Rahul Agarwal
Thank you. Thank you ladies and gentlemen for taking out this time to engage in this session. I hope we have been able to answer all the queries to your satisfaction. In case you have any further queries, you may get in touch with our investor relations team or the group cfo. And as always, I must confess that it was a huge learning exercise for us too. Thank you very much and have a good day.
Amit Kumar Gupta
Thank you.
operator
Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Doord Sabha’s conference call service. You may disconnect your lines now. Thank you and have a pleasant evening.