Shares of Sheela Foam surged 15.4 percent on Tuesday, July 18, after the company revealed that it had acquired a majority stake of 94.66 percent in Kurlon Enterprises (KEL), the renowned manufacturer of Kurl-on mattresses.
The acquisition was made at an equity valuation of ₹2,150 crore and is expected to conclude on or before November 30.
Additionally, Sheela Foam acquired a 35 percent stake in the online furniture brand HOK Furlenco, with an equity valuation of ₹857.14 crore. This investment is anticipated to be finalised by August 30.
During Tuesday’s trade, the stock opened at a price of Rs. 1,365 per share against the previous close of Rs. 1,187.05 per share and rallied further during the early trading session to touch an intraday high of Rs. 1,369.95.
At 11:30 a.m., it was trading at Rs. 1,281.25, up by 7.94 percent on the NSE.
The stock touched a 52-week high of Rs. 1,711.50 on September 05, 2022 and a 52-week low of Rs. 906.60 on March 29, 2023, indicating that at the current levels, the stock is trading 41.3 percent above its 52-week low and 25.11 percent below its 52-week high.
The stock has shown a positive growth of over 7 percent in the past one month. However, the shares of the bank have declined almost 4 percent in the last one year. It has gained nearly 75 percent in the last five years.
Through the Kurlon deal, Sheela Foam has solidified its dominant position in key product categories.
With its flagship brand Sleepwell excelling in foam products through consistent quality and innovation, and the newly acquired brand Kurl-on's expertise in rubberised coir, both companies hold leadership positions in their respective product segments.
“Sheela Foam will now command a combined market share of around 21 percent in the modern mattress market in India,” the official filing stated.
On the other hand, the acquisition of Furlenco by Sheela Foam presents an opportunity for the company to venture into the rapidly expanding branded furniture and furniture rental market.
This move allows Sheela Foam to diversify its presence and expand into the furniture sales market, positioning itself as a comprehensive portfolio company in this segment.
According to industry estimates, the furniture market surpasses Sheela Foam's current market size, with a total addressable market value of ₹1 lakh crore.
Recognising this potential, Sheela Foam intends to capitalise on the digital capabilities of Furlenco to enhance its own product offerings.
Sheela Foam Limited is an India-based company that specialises in the production of a diverse range of foam-based household comfort items, including mattresses, furniture cushions, as well as technical grades of polyurethane foams that cater to various industries.