Strong Q1 beat on volume, but FY27 revenue guidance trajectory at risk

Delivered result confirms ₹404.9 Cr, 16.6% growth

EBITDA ₹56 Cr, 13.9% margin, 25.2% YoY growth — margin expansion despite raw material inflation

Delivered PAT ₹23.4 Cr (reported), but call has ₹7.3 Cr deferred tax charge vs ₹98 Cr benefit prior quarter, distorting comparability

Pricing ~5% passed through twice; rest volume-driven by store expansion (27 COCO stores) + online uptake. Reasonable breakdown

Q1 delivered 16.6%, below 20% trajectory. Full-year projection on 20% pace would require acceleration in H2

On call: retail revenue 20.5% YoY, own channels 72.3%. Matches stated figures

Q1 showed 57.1% gross margin (up from 55.8%), masking raw material headwinds via pricing. Compression expected Q2. Specific to H1 timeframe

27.3% YoY growth (vs softer implied Q4 FY26 pace); 2/3 volume-driven. SSSG positive, online marketplace uptake strong. Prior guidance suggested mattress 'came back on track' post-Q4 slowdown.

28% of revenue but implied slower growth vs mattress; management acknowledges machine breakdown, workforce shortage, and conscious pause on furniture-first stores. Expected recovery to mid-teens next 2 quarters, not prior growth trajectory.

Polyol/TDI spot prices up 70-160%, managed to ~30-40% inflation via supplier relationships. Prices passed to consumer (~5% twice). H1 full impact expected (100-120 bps compression), not just Q1.

7.6% YoY growth after 15-20% declines in prior 2 quarters. Recovery driven by marketplace focus on growth (vs profitability) and strong sale events in July. Prior guidance hedged this cyclicality.

27 COCO stores added in Q1, 165 total, targeting 80 for FY27 (vs 42 in FY26). Payback 10-11 months for mini-stores. No change to guidance, execution consistent.

2/3 volume, 1/3 price from Middle East crisis. Volume driven by store expansion, SSSG, online uptake. Furniture expected mid-teens growth, then 25-30% when Jumbo stores open.

Initially all suppliers raised prices. Conflict flares intermittently. Long supplier relationships allow managed procurement. Price stability with weekly monitoring; supply disruption only threat.

Price increases not driven by premiumization. Premium category 15-20% of company, share increased ~20-30%. Premium mostly offline (50% of offline mattress), only 15-20% at company level. Premium online (₹15-25K) sees research online, purchases at COCO stores.

Volume strong in June, small price cut nominal due to normalization. Growth mostly volume-driven to date. Competitive intensity stable, no new entrants, same players competing (3-4 waves seen in 11 years). A&P increased from 5% to 7.5% to maintain ROI.

3-4 weeks raw material parked. Some impact Q1, more in Q2, full H1 sees total impact. OND quarter should improve if Middle East stabilizes.

Balance two forces: grow market (not take share), don't treat mattress as cash cow. Price increases necessary due to margin hit. Stabilization brief, now shortages. Blended raw material cost as prices purchased slowly increased. 100-120 bps H1 compression expected.

High-ticket, non-standardized items historically see 3-4% price moves monthly; MRP fixed, selling price flexible. Spot inflation 70-160%, net inflation 30-40% via supplier relationships, passed as 5% twice.

First Jumbo store June-July 2027, second Aug-Sept 2027 (both Bangalore). Of 165 stores, 105-106 are mega-stores (furniture), 60 are mini-stores (mattress-first).

Overall H1 margin contraction 100-120 bps max, unless further Middle East escalation. Furniture contribution margin improving quarterly; mattress higher margin product mix helped.

Own channel 20% YoY growth. Don't split website/app vs COCO store intentionally (customer journey omni-channel). Own channel online contribution up 2.3 percentage points (70% to 72%). Total online sales 7% growth.

7-8% currently. Scaling with senior hires for category/channel expertise. Percentage should remain 7-8%, may reduce as Jumbo stores mature. Operating leverage very high from full-stack ownership.

Estimate 10% organized market share (no industry report). B2B finished goods 2-3% revenue. Margins: mattress most profitable, furnishing second, furniture third. Operational EBITDA 9% this quarter vs 7.5% guidance.

Sequencing: peace treaty announced, prices dropped briefly, industry corrected (5% cuts). Then flare-up resumed, shortage occurred. Prices bought March-May now flowing through July-Sept. Operating on high-cost materials.

FY26 early stores (mostly mini-stores) now 1 year old, payback ~10-11 months (2-3 months longer than mega-stores). Catchment area (online + offline) growth 2.7x-3x. Early stage ramp-up, payback tracking.

No target market share, but goal to gain share every year in organized segment. Expect 4-5pp market share gain over 3-5 years. Own channel split historically 50/50 website vs COCO, now skewed towards COCO due to premiumization.

As D2C, can change overnight. Brief disruptions absorbed. Sustained increases (COVID-2021, now West Asia) passed after 4-6 weeks confirmation. Deflation: see if temporary or structural; if structural, adjust product portfolio mix rather than across-board cuts.

Q1 delivered 16.6% YoY. Full-year would need acceleration to 20%+ given H1 headwinds (raw material compression, furniture deceleration). Management has not re-affirmed or cut explicitly; instead deferred clarity to later quarters.

Q1 showed resilience (57.1% gross margin), but 3-4 weeks of old-cost inventory is depleting. New purchases at 30-40% inflation on polyol/TDI (bought March-May) now flowing through Q2-Q3.

Q1 operating EBITDA 9.1%, well above 7.5% target. This is the 'icing on cake' per management due to mix benefit (mattress higher margin). Guidance implies caution on sustaining 9%+ going forward.

Dependent on Jumbo store rollout, furniture reacceleration, and margin recovery post-raw material normalization. No specific annual target, just directional.

Two Jumbo stores in Bangalore with target June-July 2027 and Aug-Sept 2027 go-live. First store excavation nearly complete, civil work ongoing. Second store in government approval phase.

Spot prices up 70-160% (polyol/TDI) due to Middle East conflict. Management procured at 30-40% net inflation via supplier relationships. Further escalation could exceed 100-120 bps compression guidance; supply disruptions remain possible.

Q1 delivered 16.6% YoY growth vs prior 20%+ guidance. Full-year projection at this pace would undershoot. Management has not formally re-committed to 20% or provided revised target.

Jumbo stores (first June-July 2027, second Aug-Sept 2027, both Bangalore) are critical to furniture reacceleration (25-30% growth) and long-term margin expansion (16-17%). Delay or underperformance would derail timeline.

Management notes 3-4 waves of competitive spending seen in 11 years. Each wave temporary but damaging to margins and pricing power. Current wave stable, but historical pattern suggests recurrence.

Furniture 28% of revenue but lowest margin among categories. Growth decelerated due to conscious store-opening pause and operational issues. Dependent on Jumbo format success for step-jump. If execution slips, furniture drag on blended margins.