Summary
Wakefit Innovations Limited - Q3 FY 2026 Earnings Call Summary Wednesday, February 11, 2026, 09:00 a.m. IST
Event Participants
Executives 3 Ankit Garg (Chairman, CEO and Executive Director), Chaitanya Ramalingegowda (Executive Director), Parul Gupta (CFO)
Analysts 5 Deepak (Unifi Capital), Harsh Dhanuka (Ncubate Capital Partners), Percy Panthaki (IIFL Capital), Rachna (SiMPL PMS), Siddhartha Bera (Nomura Holdings)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹421.3 crore | +9.4% YoY; Highest-ever quarterly revenue despite festive demand shifting to September. |
| Revenue (9 Months) | ₹1,145.3 crore | +17.9% YoY; Reflects steady scaling across omnichannel touchpoints. |
| Gross Margin | Not Disclosed | +230 bps YoY but lower than H1 FY26 due to seasonal festive discounting. |
| Reported EBITDA | ₹59.18 crore | +196% YoY; 14% margin; Significant growth driven by operating leverage. |
| Operating EBITDA (IGAAP) | ₹41.64 crore | +422% YoY; 9.9% margin vs 2.1% in Q3 FY25; Excludes Ind AS lease/ESOP/onetime costs. |
| Profit After Tax (PAT) | ₹31.9 crore | 7.6% margin; Includes ₹3.93 crore Labour Code impact and ₹1.01 crore IPO expenses. |
| Investable Cash | ₹889.2 crore | Includes IPO proceeds as of December 31, 2025. |
| Store Count | 137 COCO Stores | Net addition of 11 stores in Q3; Active across 76 cities. |
| MBO Network | 1,700 stores | Spread across 453 cities; contributes low single-digit percentage to revenue. |
| Repeat Customer Ratio | 35% | Reflects brand loyalty and effectiveness of CRM programs. |
Geographic & Segment Commentary
- Mattresses: Contributed 61.3% of 9-month revenue. Growth was in the mid-teens, though Q3 was impacted by Diwali-related demand shifting to September. Realizations are improving due to premiumization (Latex, Infiniti ranges) and upselling in physical stores where ticket sizes are 60-65% higher than online.
- Furniture: Contributed 29% of 9-month revenue with a 27.5% YoY growth rate. The segment is a key driver of future margin expansion through manufacturing efficiencies and improved logistics utilization. Beds, wardrobes, and sofas are already EBITDA positive at a sub-category level.
- Furnishings: Contributed 9.7% of 9-month revenue. Includes pillows, rugs, and decor. This category serves as a high-impulse add-on to the core mattress and furniture cart, enhancing overall average order value (AOV).
Company-Specific & Strategic Commentary
- Vertical Integration: Management operates five manufacturing facilities with a “just-in-time” model for furniture. Production for furniture starts only after confirmed orders, minimizing inventory buildup and working capital.
- Omnichannel Strategy: Own channels (Website + 137 COCO stores) contribute 64.7% of sales. These channels offer higher margins by eliminating third-party marketplace costs and providing direct consumer data for LTV maximization.
- Manufacturing Efficiency: Gross margin improvements of 230 bps YoY were attributed to higher machine utilization and reduced wastage in factories rather than onetime price hikes.
- Circular Economy: Strategic focus on ESG by repurposing wood waste (sawdust) into fuel briquettes and scrap foam into rebounded foam products.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | Mid-to-high teens for FY26 | Based on demand recovery in Q4 following the Q3 festive timing aberration. |
| Store Expansion | ~50% increase in cadence | Planning to accelerate COCO store openings in FY27 using IPO proceeds. |
| A&P Spend | 8% to 9% of sales | Expected ramp-up in brand building due to increased competitive intensity in the mattress category. |
| ESOP Expenses | ₹5 crore (FY26), ₹12 crore (FY27) | Projected costs for employee stock options over the next two fiscal years. |
| Furniture Growth | Early-to-mid 20% range | Higher growth expected relative to mattresses due to a smaller base and catalog expansion. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Intensity | Management noted rising competition in the mattress segment, necessitating a return to higher historical A&P spending (8-9%) which may pressure short-term margins. |
| Consumer Wallet Shift | Recent GST reforms in other discretionary categories caused a temporary shift in consumer spending away from home solutions in Q3. |
| Timing of Demand | Performance is highly sensitive to the festive calendar (Diwali timing); shifts between Q2 and Q3 can lead to perceived volatility in quarterly growth rates. |
Q&A Highlights
Segment Growth & Demand
- Question: Why did the GST-led shift affect mattresses more than furniture? (Percy Panthaki)
- Answer: Mattress demand spikes 8-10x during festive sales. This year, the spike happened in late September (Q2) due to the calendar, whereas furniture has a smaller, more manageable festive spike (Chaitanya Ramalingegowda).
Profitability Levers
- Question: Where will future margin juice come from? (Siddhartha Bera)
- Answer: While mattresses are most profitable, furniture offers nonlinear margin growth through R&D optimization, manufacturing efficiency, and middle-mile logistics utilization (Chaitanya Ramalingegowda).
Marketing & CAC
- Question: How do you track Customer Acquisition Cost (CAC) across channels? (Ritesh Shah)
- Answer: CAC is difficult to track due to marketplace data gaps. The company uses A&P as a % of revenue and repeat purchase rates as proxies to ensure efficiency (Chaitanya Ramalingegowda).
Expansion Strategy
- Question: What is the plan for store additions next year? (Siddhartha Bera)
- Answer: The company plans to increase the store opening cadence by approximately 50% starting April 1, focusing on regular COCO formats (Chaitanya Ramalingegowda).
Key Takeaway
Wakefit delivered its highest-ever quarterly revenue of ₹421.3 crore in Q3 FY26, growing 9.4% YoY despite a shift in festive demand to the previous quarter. The company demonstrated significant operating leverage, with Operating EBITDA margins expanding to 9.9% from 2.1% YoY. Strategic focus remains on vertical integration and a “just-in-time” manufacturing model for the furniture segment, which grew 27.5% in the nine-month period. Management is prioritizing an omnichannel approach, with 64.7% of sales coming from high-margin internal channels and a 35% repeat customer rate. While A&P spends are expected to rise to 8-9% to counter competitive intensity in mattresses, the company expects mid-to-high teen revenue growth for the full year. Looking ahead, Wakefit intends to accelerate its physical store footprint and sweat existing manufacturing assets to drive continued margin expansion.
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