Wakefit FY26: Profits improved, but input costs and competition rose

Wakefit Innovations ended FY26 with its highest ever annual revenue from operations of INR 1,488.9 crore, up 16.9% year on year. The year also marked a clear step-up in profitability. Operating EBITDA rose to INR 112.3 crore, taking the operating EBITDA margin to 7.5% from 1.4% in FY25.

The March quarter was more mixed. Revenue from operations grew 13.5% YoY to INR 343.6 crore, but management described a softer demand environment in the latter half of Q4 as discretionary spending moderated. At the same time, cost pressures spiked sharply in March 2026 across several raw materials, with polyol and TDI seeing price increases of 30% to 160% as per management.

One accounting point matters when reading headline profits. FY26 PAT is stated as after the impact of a deferred tax asset of INR 98.1 crore recorded under tax expense in Q4FY26. This makes PAT less comparable across periods, even though underlying operating metrics improved.

Growth stayed led by mattresses, while furniture expanded faster

Wakefit’s category mix in FY26 remained anchored in mattresses, but furniture continues to gain relevance as the omnichannel network scales.

Mattresses contributed 61.4% of FY26 revenue, furniture contributed 29.3%, and furnishings contributed 9.3% (as disclosed in the investor presentation and press release). In absolute terms, FY26 revenue by category was INR 913.9 crore for mattresses, INR 435.8 crore for furniture, and INR 139.3 crore for furnishings.

Management commentary highlighted that mattresses grew about 17% YoY in FY26 and 20% YoY in Q4FY26. Furniture grew about 24% YoY in FY26 and 14% YoY in Q4FY26, aided by conversions across physical retail locations. Furnishings remained smaller and more uneven. The KPI table shows furnishings revenue at INR 139.3 crore in FY26 versus INR 140.6 crore in FY25.

The company continues to stress a platform approach. In FY26, repeat customers contributed 35.3% of revenue from operations, and management framed this as central to cross-category expansion.

Financial summary

Notes: Financials are as presented in the investor deck P&L table. FY26 PAT is after the impact of deferred tax asset of INR 98.1 crore (as stated in the presentation).

Owned channels increased sharply, and stores remain central to the plan

A key structural shift for Wakefit in FY26 was channel mix. Owned channels (website plus COCO stores) contributed 67.2% of FY26 revenue versus 55.0% in FY25. In Q4FY26, owned channels rose further to 75.5%.

Management positioned this as more than a margin lever. Owned channels enable better unit economics by reducing marketplace commissions and allow stronger customer retention through CRM and data-led reactivation. The company also maintained that external channels remain strategic, especially for reach and demand testing.

On physical expansion, Wakefit ended FY26 with 139 active COCO stores across 76 cities. During FY26, it added 42 stores and closed 8 stores. In the earnings call, management said the closures were driven by logistical inefficiencies and operational constraints rather than weaker demand.

MBO expansion also continued. The company ended March 2026 with 1,948 MBO stores across 536 cities, up about 30% in store count as per management.

Cost inflation, pricing actions, and what changes in FY27

The most immediate operating swing factor entering FY27 is input cost inflation. Management described sharp increases across polyol and TDI and broader cost pressures across crude-linked inputs, packaging, logistics, and infrastructure. The company attempted to mitigate this through supplier relationships and proactive stocking.

Wakefit also took pricing actions. Management stated pricing actions started in the latter part of March, followed by another round of price revisions in April. In Q&A, management discussed that if spot prices persist and old inventory benefit fades, the overall mattress COGS inflation could be around 30%, highlighting the risk to near-term margin expansion.

Competition also increased. Management indicated that competitive intensity has risen in the past six to nine months, including from smaller players with lower cost structures and strong regional presence. This was visible in marketing intensity. In Q4FY26, marketing spend was about 7.3% of revenue from operations, and the CFO reiterated that medium-term A&P spend could be around 7% to 8% of sales, with monitoring on success metrics.

Expansion beyond the core: MOA changes and the Jumbo store thesis

Wakefit is also preparing for broader category adjacency. The Board approved amendments to the MOA object clauses to support expansion into adjacent categories within the mattress, furniture, and furnishing ecosystem. Management explained that these additions are intended to complete the portfolio and support the vision of being a one-stop home destination. In the call, management stated these amendments are not expected to have meaningful financial impact in the medium term.

A second strategic initiative is the Jumbo store concept. Management described these as 100,000 sq ft plus large-format stores designed to showcase aspirational home setups and complete room looks. The first Jumbo store is projected for early FY28 (April to May), with a stated breakeven target of about 18 to 24 months.

The company also discussed investment levels. In the call, the CFO indicated FY27 capex could be around INR 120 crore to INR 140 crore, largely for retail expansion and including a substantial portion of the initial Jumbo store capex.

Takeaways

FY26 established Wakefit’s ability to grow while improving profitability, with operating EBITDA rising meaningfully and owned channels strengthening. But the operating environment entering FY27 is more volatile. Raw material inflation, elevated competition, and higher marketing intensity are all likely to test margin stability.

The next phase of the story is execution-led: scaling COCO stores into Tier 2 markets, holding unit economics steady, and expanding the assortment through adjacent categories without losing focus on the three core categories. The company’s liquidity position, disclosed investable cash of INR 958.6 crore as of March 31, 2026, provides room to execute, but delivery on store rollouts and pricing discipline will shape how sustainable the FY26 profitability improvement proves to be.