Wakefit Reports Margin Pressure Due to Input Inflation, Stock Prices Decline 7%

Wakefit Innovations Ltd Shares Fall 7% Amid Concerns Over Crude Oil-Linked Input Costs

Shares of Wakefit Innovations Ltd, a leading home and sleep solutions company, plummeted as much as 7% on Friday after the company warned that a sharp rise in crude oil-linked input costs could weigh on its margins and near-term profitability despite recent price hikes.

The sharp increase in crude oil prices, triggered by disruptions in the US-Iran war, is starting to squeeze consumer businesses beyond traditionally fuel-intensive sectors. The company's chief financial officer, Parul Gupta, stated in an analyst call on Friday that the combined impact of higher input costs and price pass-through may constrain margin expansion in the near term.

In its latest quarterly earnings report, Wakefit reported a net profit of ₹121.8 crore in the fourth quarter of FY26, a significant improvement from a loss of ₹26.2 crore a year ago, largely due to a one-time deferred tax credit of ₹98.1 crore. Sequentially, net profit grew 282% from ₹31.9 crore in the December quarter. Despite this growth, the company's shares ended at ₹134.51 on the National Stock Exchange (NSE) on Friday, 6.6% lower on a day that saw the benchmark Nifty50 close 0.3% higher.

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Wakefit's shares have fallen 28% since January, compared to a 9% decline in Nifty50. The company reported an earnings before interest, tax, depreciation, and amortization (Ebitda) margin of 6.3% in the quarter, which was moderated by higher spending on advertising and marketing initiatives, coupled with heightened competitive intensity in the category.

Wakefit's marketing spending for the reporting quarter was about 7.3% of the revenue from operations, up from 5.3% in the previous quarter. The mattress industry's key raw materials, including polyol and toluene diisocyanate, are derived from crude oil, and prices for some raw materials rose by as much as 80% and even 160% from the pre-war period at one point, according to the company's management.

The Worldpanel by Numerator's FMCG Pulse published earlier this week warned that most macro assumptions for India's outlook for the year were built around crude oil prices averaging $80-85 a barrel. If prices hover around the current level of $100 for a prolonged period, it could significantly alter cost structures across sectors.

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Wakefit's revenue from operations rose to ₹344 crore in Q4 FY26 from ₹303 crore a year ago. For the entire FY26, the revenue was up 17.5% at ₹1,534 crore from ₹1,305 crore in FY25. India's home furnishings and decor market was estimated at ₹790-860 billion in 2024, according to industry estimates.

Wakefit is currently focusing on massive offline expansion and advertisement campaigns, which is not exciting analysts. The company recently ran a big campaign featuring actor-comedian Johnny Lever and another for Mother's Day. Its rival Sleep Company went a notch higher with massive ads featuring cricketer M.S. Dhoni.

At the end of March 2026, Wakefit had 139 active company-owned company-operated stores across 76 cities. Over the year, it net added 34 stores.