Sham Foam Limited, a Haryana-based vertically integrated manufacturer of polyurethane (PU) foam and home comfort products, has filed its Draft Red Herring Prospectus (DRHP) for an SME Initial Public Offering. The company plans to raise approximately ₹35.01 Crore through a fresh issue to fund capacity expansion and working capital requirements. With revenue growing from ₹73.73 Crore in FY2024 to ₹92.32 Crore in FY2026, Sham Foam aims to leverage its pan-India dealer network of over 1,300 dealers to scale operations further.

Company Overview

Sham Foam Limited is engaged in the manufacturing, distribution, marketing, and selling of PU foam, mattresses, and allied home comfort products. Incorporated in 2020, the company operates as a full-stack vertically integrated entity, controlling processes from product design to customer engagement. Its state-of-the-art manufacturing facility in Ambala City, Haryana, spans 2,04,460 sq. feet with an installed capacity of 15,000 TPA for foam production.

The company holds ISO 9001:2015 and BIS Certification (IS 7933:2022). It serves customers across 13 states through a robust dealer network. Key revenue-contributing states include Uttar Pradesh (27.34%), Punjab (21.13%), Haryana (12.98%), and Delhi (11.45%).

Offer Details

The SME IPO is structured as a fresh issue with no Offer for Sale (OFS). The total issue size is approximately ₹35.01 Crore. The price band is not yet available. The proceeds will be utilized for capital expenditure, working capital, and general corporate purposes.

Objects of the Issue

Financial Highlights

Sham Foam demonstrated strong financial performance over the last three years. Revenue from operations grew at a CAGR of approximately 11.90%, while net profit surged significantly in FY2026.

Risk Factors

Investors should note several material risks disclosed in the DRHP:

1. Outstanding Litigation: The company, promoters, and directors are involved in legal proceedings involving ₹536.42 Lakhs. Adverse outcomes could impact reputation and finances.
2. Raw Material Volatility: Raw material costs constituted 78.75% of revenue in FY2026. The top 10 suppliers account for 78.56% of purchases, creating supply concentration risk.
3. Leased Facility: The manufacturing unit is on a 30-year lease (August 2025 to July 2055). Non-renewal or unfavorable relocation terms could disrupt operations.
4. Customer Concentration: Top 10 customers contributed 25.06% of revenue in FY2026. There are no long-term agreements with these customers.
5. Negative Cash Flows: The company reported negative net cash flow of ₹1.05 Crore in FY2025, though it recovered to ₹5.39 Crore in FY2026.

Valuation & Peer Comparison

Specific peer comparison data and valuation multiples are not available in the DRHP. However, Sham Foam’s PAT margin expanded from 4.03% in FY2024 to 9.37% in FY2026, indicating improved operational efficiency. Investors will need to assess the valuation once the price band is disclosed, considering the post-issue equity base expansion from the ₹35.01 Crore infusion.

Bottom Line

Sham Foam Limited presents a growth story with strong revenue scaling and improving profitability metrics. The vertical integration and extensive dealer network provide competitive advantages. However, investors must weigh these against high raw material costs, litigation risks, and the company’s relatively short operating history since incorporation in 2020.

Sham Foam Limited, a vertically integrated manufacturer of polyurethane (PU) foam and home comfort products, has filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). The company, incorporated in 2020 and based in Haryana, aims to raise ₹3,500.50 Crores through a fresh issue. The funds are earmarked for capital expenditure, working capital requirements, and general corporate purposes. The IPO is scheduled to open on 11-Aug-2026 and close on 13-Aug-2026.

Company Overview

Sham Foam Limited operates as a full-stack entity in the manufacturing, distribution, marketing, and selling of PU foam, mattresses, and allied home comfort products. The company also supplies industrial-grade PU foam to various sectors.

Key operational highlights include:

• Manufacturing Facility: A state-of-the-art facility in Ambala City, Haryana, spanning 2,04,460 sq. feet. It holds ISO 9001:2015 and BIS Certification No. IS 7933:2022.
• Capacity: Installed capacity of 15,000 TPA with available capacity of 6,000 TPA. Capacity utilization stood at 87.62% in FY 2025-26.
• Distribution: Pan-India presence across 13 states with a dealer network of over 1,300 dealers. Key revenue contributors include Uttar Pradesh (27.34%), Punjab (21.13%), Haryana (12.98%), and Delhi (11.45%).
• Management: The company is led by the Jindal family, who occupy all five C-suite positions, including Managing Director Mr. Rajinder Kumar Jindal and CEO Mr. Sanjeev Kumar Jindal.

Offer Details

The IPO is structured as a fresh issue with no Offer for Sale (OFS). The total issue size is ₹3,500.50 Crores. Price band, lot size, and face value details are not yet available in the DRHP data provided.

Use of Proceeds

Timeline

Financial Highlights

Detailed financial statements such as Profit After Tax (PAT) and EBITDA are not available in the provided data. However, key metrics from FY 2025-26 indicate significant raw material dependency and trade receivables.

Note: The implied revenue figure is derived from the disclosed raw material cost of ₹7,270.04 Lakhs representing 78.75% of revenue.

Risk Factors

Investors should note several material risks highlighted in the DRHP:

1. Trademark Litigation: Sheela Foam Limited has filed a civil suit seeking ₹2,00,10,000 in damages alleging trademark infringement regarding the 'FEATHER FRESH' trademark.
2. Raw Material Dependency: Raw material costs constitute 78.75% of revenue. Top 10 suppliers account for 78.56% of purchases, with no long-term supply agreements.
3. Single Facility Dependence: All manufacturing is concentrated in one facility in Haryana, exposing the company to operational disruptions.
4. Geographic Concentration: Approximately 72.90% of domestic revenue comes from four North Indian states (UP, Punjab, Haryana, Delhi).
5. Negative Cash Flows: The company reported negative net cash flows of ₹(105.37) Lakhs in FY 2024-25.

Valuation & Peer Comparison

Peer comparison metrics such as P/E ratios are not available. However, the IPO proceeds of ₹3,500.50 Crores appear significantly large relative to the implied FY 2025-26 revenue of ₹92.32 Crores (₹9,232 Lakhs), resulting in an IPO proceeds to revenue ratio of approximately 37.9x. Listed peers in the sector include Sheela Foam Limited and Kurl-on Limited.

Bottom Line

Sham Foam Limited presents a growth story centered on capacity expansion and pan-India distribution. However, investors must scrutinize the high issue size relative to current revenue scale, ongoing litigation with a major competitor, and concentration risks in geography and supply chain. The final Red Herring Prospectus will provide complete financial details necessary for a comprehensive valuation assessment.