Why Wakefit shares fell 8% on Friday despite Q4 profit jump

Wakefit Innovations shares slipped about 8% on Friday even after the company reported a sharp turnaround in standalone profit for Q4FY26, because the bottom line was flattered by a large deferred tax asset credit and management flagged softer demand in the second half of the quarter. The stock-linked reaction came despite a 13.5% rise in revenue and a swing to a ₹121.75 crore profit from a loss a year earlier.

Profit turns, but not all operating

Wakefit’s standalone revenue from operations rose to ₹343.6 crore in Q4FY26 from ₹302.6 crore a year earlier, while reported EBITDA climbed to ₹36.5 crore from ₹6 crore. Including other income, EBITDA was ₹53.9 crore, with a 15.7% margin. Profit after tax came in at ₹121.75 crore versus a loss of ₹26.2 crore in Q4FY25, but the company said this was after a deferred tax asset credit of ₹98.07 crore.

That tax credit was the biggest reason for the sharp profit jump. The company said it reassessed the recoverability of carried-forward losses and unabsorbed depreciation and recognised a deferred tax asset of ₹103.44 crore on the balance sheet, with ₹98.07 crore flowing through the profit and loss account.

Why the stock slipped

The market appeared to focus less on the accounting-led profit swing and more on the operating commentary. Wakefit said demand trends normalised early in the quarter, but discretionary spending moderated in the latter half of Q4FY26 because of macro headwinds, leading to softer demand. It also said increased advertising and marketing investments, along with heightened competition, pressured margins.

Management added that raw material costs rose sharply toward the end of the quarter, with select inputs such as polyol and TDI increasing 30% to 160%. “The impact of cost inflation was partly mitigated through strong supplier relationships built over the years,” executive director Chaitanya Ramalingegowda said. He added that the company initiated “measured pricing actions” in March and a further round in April.

Management commentary

Chairman, CEO and executive director Ankit Garg said, “In FY26 we set a new record in terms of revenue from operations,” and added that the mattress segment grew about 17% year-on-year, while furniture grew about 24%. He also noted that the company is targeting revenue growth in FY27, supported by the mattress portfolio and a wider furniture and furnishing reach.

Wakefit also ended FY26 with ₹95.86 crore in investable cash and 139 active COCO stores, while its MBO network rose to 1,948 stores across 536 cities. The company said it remains focused on omnichannel expansion, product innovation and store growth.