Sheela Foam is a manufacturer of mattress brand 'Sleepwell' and has 11 manufacturing facilities in India (123,000 TPA capacity) and five manufacturing facilities in Australia (10,500 TPA). It has strong distribution network and derives 80% of domestic revenues from B2C channel. Angel Broking has recommended 'Subscribe' to IPO of Sheela Foam.

On its FY17E's PAT of Rs 1.21 billion, the issue on its upper band is priced at P/E ratio of 27x which is at par with consumer durable peers which have strong brand and higher B2C sales.

Commenting on the investment rationale, the stock broker said, ''We consider following strong points as well 1) Net cash positive balance sheet 2) easing working capital cycle from >40 days in FY12 to current 26 days 3) improving return ratios with better product mix and 4) promoters experience. Considering the market conditions we would not suggest this IPO for listing gains but rather we recommend 'Subscribe' on this issue for medium to long term perspective.''

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