Mattress Momentum Meets Guidance Risk

Profit took a tax hit. Q1 reported PAT of ₹23.4 crore includes a ₹7.3 crore deferred tax charge — a swing from the ₹98 crore tax benefit in the prior quarter. Strip that out: underlying operating profit is ₹30.7 crore, a 7.6% net margin. That's the organic takeaway.

But the profit math isn't the headline risk. It's this: Q1 revenue of ₹404.9 crore grew 16.6% year-on-year. That's solid momentum. It's not what Wakefit promised. In the prior year's guidance, management said it was targeting at least 20% revenue growth for FY27, driven by mattress and improving reach in furniture and furnishings. Q1 landed at 16.6%. For a full-year hit of 20%+, H2 would need to accelerate sharply. Management declined to re-commit to the target on this call, saying they weren't in a position to comment yet. That silence is a caution signal.

Mattress — 65.9% of revenue — delivered 27.3% year-on-year growth: 2/3 volume-driven, 1/3 from pricing. Volume momentum came from 27 COCO store additions (tracking toward 80 for the year), positive same-store same-group sales, and strong online marketplace uptake. Pricing gains came from two 5% price increases, necessary to offset raw material cost inflation (polyol and TDI spot prices up 70–160% from Middle East supply shocks). Management achieved a net pass-through of roughly 30–40% inflation via supplier relationships and passed the rest to customers.

Furniture — 28% of revenue — decelerated from prior growth rates. Management consciously paused furniture-first store openings to improve unit economics and cited machine breakdowns and workforce shortages. Growth is expected to return to mid-teens in the next two quarters, then step-jump to 25–30% post-Jumbo store launch (June–July 2027). Furnishing and Decor (6.3% of revenue) held steady.

Own channels — COCO stores plus direct-to-consumer website — held 72.3% of revenue and grew 20.5% year-on-year. Online was 52.7% of total revenue; offline 47.3%. External channels (marketplaces) recovered to 7.6% growth after two quarters of sharp 15–20% declines, powered by marketplace partners' focus on growth cycles and major sale events (notably July).

Gross margin of 57.1% was up 190 basis points from 55.8% a year ago — a standout number given raw material headwinds. The company achieved it via two levers: first, pricing pass-throughs (5% twice), and second, inventory rundown. Q1 held 3–4 weeks of old-cost inventory. That buffer is running out. Management has guided that H1 FY27 will see full raw material cost impact, with gross margin compression of 100–120 basis points. Q2 will be materially worse than Q1.

The stock opened to a flat result reaction (day 1: −0.11%), but the verdict faded fast. By day 5, the sell-off had widened to −4.32% — a market-level judgment that the quarter undershot expectations. The stock now trades at ₹121.38, down 45.81% from its all-time high of ₹224. It sits below its 20-day and 50-day moving averages. Institutions are trimming: FII ownership fell 90 basis points quarter-on-quarter to 14.48%, and DII dropped 77 basis points to 25.85%.

The post-result weakness mirrors the fundamental concern: Q1 growth of 16.6% is not a confidence signal for hitting 20%+ full-year. Management's refusal to re-commit adds to the uncertainty. The chart is no longer offering the benefit of the doubt.