Bonus Stock To Buy: ICICI Direct Sees Mid Cap Consumer Durables Stock Rising, Invest

ICICI Direct remains bullish on mid cap stock operating in Consumer Durables Sector, Sheela Foam Ltd (SFL) and assigned buy call with a target price of Rs 3300 apiece. If investors buy the stock today, they will also remain eligible to receive bonus shares.

If you buy Sheela Foam at current market price of Rs 2598 apiece, the stock will offer potential 27% return. The stock has declined 35% from its 52-week high price and currently trading just 2% away from 52-week low. Check key takeaways below:

1. Sheela Foam Ltd Sets Record Date For Bonus Issue

The board of directors of the company said in the BSE filing dated December 12, 2022, "In continuation of Voting Results & Scrutinizer''s Report submitted vide our letter dated December 12, 2022 and pursuant to Regulation 42 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, it is hereby informed that the Company has fixed Thursday, December 22, 2022 as the Record Date for the purpose of ascertaining the eligibility of shareholders for issuance of Bonus shares in the ratio of 1 (One) equity share of Rs. 5/- each for every 1 (One) equity share of Rs.5/- each held by the Members."

Therefore, the record date has been fixed as December 22, 2022.

2. Sheela Foam Ltd Stock Performance & Return

The last trading price of the stock is Rs 2598 with a marginal fall of 0.08%. The stock's 52-week high is Rs 4054 apiece and 52-week low is Rs 2533 apiece. The company has a market capitalisation of Rs 12,673 crore. Sheela Foam Ltd Return: The stock has given 50% return in the last 5-years and 102% return in the last 3-years. It has declined 20% in last 1-year.

3. Valuation

According to ICICI Direct, "We maintain our BUY rating on the stock. We value the stock at 50x FY24E EPS with revised target price of Rs 3300/share."

Prices of SFL's key raw materials, TDI and Polyol have softened significantly. TDI prices have declined by ~10% to Rs 225/kg from an average of Rs 248/kg in Q2FY23. Polyol prices are at an all time low of Rs 120/kg. This is expected to aid the margins of the company.

The management expects gross margin to be at ~45% or a little higher in the coming quarters.
SFL has maintained its Capex guidance of Rs 350 crore over the next two years to increase its manufacturing capacity by 23% in India & overseas.

4. About Sheela Foam Ltd

A leader in Polyurethane (PU) Foam, Sheela Group is a multi-billion rupee entity. It has a nationwide presence in manufacturing PU Foam with a global marketing perspective and an impeccable track record, since 1971.

Sheela Group is committed to a one-point programme that of bringing comfort, convenience and luxury to enhance the lifestyle of a modern man.

The winning 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 are ranked as the largest selling PU Foam in the country, according to its official website.

Disclaimer

The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.