sheela foam

Sheela foam OFS comprises sale by promoters Rahul Gautam and Tushaar Gautam, Together they will sell 42.33 lakh shares, representing 8.68 per cent of the paid-up equity shares at a floor price of ₹1,100 a share. The sellers plan to sell an additional 4.878 lakh shares each as green shoe option. Sheela Foam OFS in totality involves the promoters to sell up to 10.68% equity aggregating to Rs. 573 crore. The Floor Price @ Rs. 1100 is at 16.2% discount to last market price.

About Sheela Foam OFS

Issue Period27-03 and 28-03-2019
Face Value10
Floor Price1100
MP a Day before1313.95
% Discount of Floor Price16.28%
Base Offer (shares)42,33,764
Green shoe Option9,75,656
Total with GreenShoe (shares)52,09,420
Total in Rs. Cr.573
Base offer Retail (Shrs)4,23,376
Base offer Retal- Rs. Cr47
Tot  offer Retail (Shrs)520942
Tot  offer Retail Rs. Cr57
Allocation MethodologyPrice Priority

Updates:

  • Sheela Foam OFS Day 2, Allotment likely at Rs. 1203.60 to retail
  • Sheela Foam OFS Day 1, Clearing price fixed at Rs. 1175.55

OFS Allocation Methodology

  • Retail investor shall mean individual investor who places bids for Sale Shares of total value of not more than Rs. 2,00,000/- (Rupees Two Lacs only) aggregated across the Stock Exchanges (“Retail Investor”).
  • No discount is being offered to Retail Investors.
  • 10% of the Sale Shares shall be reserved for Retail Investors subject to the receipt of valid bids (the “Retail Category”). The Stock Exchanges will decide the quantity of Sale Shares eligible to be considered in the Retail Category, based on the Floor Price.
  • Unsubscribed portion of the Sale Shares reserved for Retail Investors shall be available for allocation to the investors in the Non-Retail category choosing to carry forward their bids to T+l Day and who have not been allotted Sale Shares on T Day. However, such investors are required to indicate their willingness to carry forward the bids to T+ 1 Day.
  • Retail Investors will have an option to place a price bid or bid at “Cut off Price”. Cut-Off Price means the lowest price at which the Sale
  • Shares are sold, as shall be determined based on all valid bids received in Non-Retail category on T Day.
  • Upon determining Cut-Off Price for the Retail Category, the Sale Shares reserved for such category shall be allocated to eligible bids of Retail Investors on price priority method at multiple clearing prices in accordance with the SEBI OFS Circulars. In case of excess demand in the Retail Category at the clearing price/Cut-Off Price, allocation shall be done on a proportionate basis at such clearing price/Cut-Off Price(as the case may be). Bids by Retail Investors below the Cut-Off Price shall be rejected.
  • Settlement shall take place on a trade for trade basis. For bids received from Non-Retail Category on T Day, non-institutional investors and institutional investors who place orders with 100% of the order value deposited upfront, settlement shall take place on a T+I Day. In the case of institutional investors who place bids without depositing 100% of the order value upfront, settlement shall be as per the existing rules for secondary market transactions (i.e., on T+2 Day). For the bids received on T+l Day, from the Retail Category and from the un-allotted non-Retail Investors who choose to carry forward their bid to T+l Day, the settlement shall take place on T+3 Day. In case of non-institutional investors and institutional investors bidding with 100% margin upfront who chose to carry forward their un-allotted bids to T+1 Day, the settlement shall take place<on T+2 Day.
  • The allocation to the non-Retail Investors shall be at price equal to the Cut-off Price or higher as per the bids.

About Sheela Foam

  • Sheela Foam is a leader in Polyurethane (PU) Foam and has a nationwide presence in manufacturing PU Foam with a global marketing perspective and an track record, since 1971.
  • The brands of Sheela Group include
    • SLEEPWELL – The flagship brand for mattresses and comfort accessories
    • FEATHER FOAM – A Pure PU Foam
    • LAMIFLEX – A superior quality POLYETHER/POLYESTER foam for lamination
  • These brands are ranked as the largest selling PU Foam in the country.

Sheela Foam Share Price Chart & Financial Overview

Sheela Foam Ltd price chart

Financial Summary

Market Cap in Rs. Cr6,357
Revenue FY18 in cr2134.6
CMP in Rs.1,303
Face Value5
Price / Earning (PE)49.65
Book Value135
Price / BV9.67
ROCE %34.60%
ROE  %25.20%
Dividend Yield0%
Sales 3 yr CAGR11.61%
Debt / Equity Ratio0
52 week High/Low1817.95 / 1230.00

Sheela Foam OFS: Salient points and Assessment

  • Sheela Foam promoters – Rahul Gautam and Tushaar Gautam, are selling their stake to minimum public holding target..
  • Sheela Foam has delivered a poor growth of 11.58% over past five years but has delivered as good consistent profit growth of 34.97% over 5 years.
  • Sheela Foam reported Flat Financial performance in Dec-18.
  • In last one year the stock has underperformed the sensex by -32.64%
  • Mattress sales volume in the past two quarters has been not upto the mark due to rising competition from both organized and unorganized players.
  • Some Analysts are of the opinion that company price may not show much uptrend as +ves are built into the stock price.
  • Company is virtually debt free.
  • Company has a good return on equity track record: 3 Years ROE 29.61%.
  • Floor Price at Rs. 1100 is at good 16.2% discount to last market price.
  • Cut-off price will be determined based on the bids received on T Day
  • Bidding in OFS opportunities like Sheela Foam OFS is many time frustrating for retail investors as big investors change bid price at the last moment. further there is need to pay money upfront and allotment many times is difficult.
  • I intend to apply in Sheela Foam OFS on Day 1. The experience of applying in such OFS is most of the time frustrating with no allotment particularly when markets are doing well and this must be clear to investors.
  • Sheela Foam is not in F&O which may limit the activity undertaken by large arbitrage players. This also leads to lower protection for the stock once the shares allotted in OFS come into market.
  • The shares allotted in OFS could be up to 10.68% and considering present low free float & stock not being in F&O, it may exert pressure on the share price.
  • Standard disclaimer:  I am not a SEBI registered analyst. I may have vested interest in every stock I discuss. Please do your own due diligence as stock market investments have high degree of inherent risk.