Wakefit Innovations Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW1

Global economic growth is projected at 3.4% in 2025, gradually easing to 3.1% in 2026 and 3.2% in 2027, weighed down by geopolitical tensions, trade fragmentation, and softer global demand. Headline inflation, after rising from 4.1% in 2025 to 4.4% in 2026, is expected to decline to 3.7% by 2027, though progress varies across regions. Advanced economies are forecast to grow modestly at 1.7-1.9%, with the US showing relative resilience while the Euro Area and Japan remain sluggish; emerging markets continue to outperform at around 4%, driven by domestic consumption and infrastructure investment. In the Middle East, the UAE is growing at 3.9%, and Saudi Arabia is supported by strong consumer spending, while Southeast Asia presents a mixed picture. Singapore grew 5% in 2025 but is moderating to 4.6% in early 2026. Risks are skewed firmly to the downside: under an adverse scenario, growth could fall to 2.5% with inflation hitting 5.4%. Elevated policy uncertainty around trade and tariffs is expected to persist through 2026, weighing on investment and cross-border flows, while ongoing conflict continues to disrupt shipping routes, energy infrastructure, and commodity prices. Central banks face a delicate balancing act, with inflation risks tilted upward in the US and delayed action in emerging markets, risking de-anchored expectations. Policymakers are urged to preserve price and financial stability, keep fiscal support well-targeted, and avoid untargeted energy subsidies, with the IMF noting that an early end to hostilities remains the single most effective economic remedy.

INDIAN ECONOMIC OVERVIEW

India remained one of the worlds fastest-growing major economies in FY 2025-26, supported by robust domestic demand, sustained public investment, and stable macroeconomic fundamentals - even as global uncertainties and evolving trade dynamics posed external headwinds.

Real GDP grew 7.7% in FY 2025-26, driven by strong private consumption, infrastructure spending, and continued momentum in the services sector.2 Private Final Consumption Expenditure rose 7.6%, while manufacturing and construction activity strengthened further.3 Favourable monsoon conditions supported agricultural output and rural demand.4 Industrial output reflected this momentum, with the Index of Industrial Production growing 4.1% year-on-year in March 2026, up from 3% in March 2025. Mining and manufacturing led the expansion, with growth of 5.5% and 4.3%, respectively, while electricity generation grew modestly by 0.8%.5

Consumer Price Index (“CPI”) inflation eased to 3.4% in March 2026, supported by softer food prices and improved supply conditions.6 The Reserve Bank of India maintained a balanced monetary stance, holding the repo rate at 5.25% to support growth while preserving financial stability.7 Sovereign rating upgrades during the year further reflected confidence in Indias macroeconomic position.

On the fiscal front, the Government maintained a focus on consolidation alongside growth-oriented expenditure, with infrastructure-led capital spending remaining a key priority. Reforms across taxation, expenditure management, and investment promotion - alongside initiatives such as Make in India and the Production-Linked Incentive schemes - continued to strengthen domestic manufacturing in support of the long-term Viksit Bharat vision.8

The IMF projects Indias economy to grow at 6.5% in both 2026 and 2027,9 while the World Bank forecasts GDP growth of approximately 6.6% in FY 2026-27.10 Indias potential growth is estimated at around 7%, with FY 2026-27 real GDP projected in the 6.8-7.2% range.11 External risks - including elevated energy prices, geopolitical tensions, and supply chain disruptions - pose headwinds to inflation and investment, but are unlikely to derail the broader growth trajectory. Indias recent shift from the fourth-largest to the sixth-largest global economy, against earlier expectations of fourth place, is attributed to rupee depreciation and revisions to GDP measurement rather than any deterioration in fundamentals. Over the next decade, continued reforms, domestic consumption, and investment momentum are expected to position India as the third-largest economy globally.

INDUSTRY OVERVIEW

Global Mattress Industry12

The global mattress market size was estimated at USD 49.24 billion in 2025 and is expected to reach USD 83.36 billion by 2033, growing at a CAGR of 6.9% from 2026 to 2033. The growing awareness of the importance of sleep quality has significantly impacted consumer behavior, leading many to prioritize sleep health. Asia Pacific led the mattress market with a revenue share of 38.5% in 2025.

Sleep quality has increasingly been recognized as a foundational pillar of overall well-being, with direct implications for physical health, cognitive function, and emotional balance. As consumer awareness deepens, purchasing behavior has grown more deliberate, driving sustained demand for premium mattress products while compelling manufacturers to continuously innovate and align offerings with evolving health and lifestyle expectations.

Technological advancement has been a defining force reshaping the industry, most visibly in the rapid growth of the smart mattress segment. Innovations spanning memory foam, hybrid constructions, and sleep-tracking integrated mattresses have resonated strongly with consumers seeking personalized comfort and measurable sleep improvements. These developments collectively position the mattress as an active wellness tool, well-placed to capture the growing consumer base that prioritizes health optimization and data-driven lifestyle choices.

Indian Mattress Industry13

Indias mattress market, valued at 145 to 160 billion (U.S.$1.7 to 1.9 billion) in CY2024, has grown at a 7% to 9% CAGR since CY2019. The Mattress category accounts for approximately 5% share of home & furnishings by value, projected to grow at a CAGR of 10% to 12% to 270 to 300 billion (U.S.$3.2 to 3.6 billion) by CY2030.

In terms of segment, foam was the largest revenue generating type in 2025. Foam is the most lucrative type segment registering the fastest growth during the forecast period. In terms of revenue, India accounted for 6.0% of the global mattress market in 2025. Country-wise, China is expected to lead the global market in terms of revenue in 2033. In Asia Pacific, China mattress market is projected to lead the regional market in terms of revenue in 2033. India is the fastest growing regional market in Asia Pacific and is projected to reach USD 5,939.2 million by 2033.

Foam-based mattresses continued to lead the Indian mattress market, accounting for a dominant revenue share of 58.33% in 2025. Market segmentation across foam, innerspring, and hybrid categories reveals consistent revenue expansion across all sub-segments, with growth projections extending through 2033.

The competitive landscape in India remains largely driven by domestic manufacturers, whose ability to offer quality products at accessible price points has been a key growth enabler. The widespread availability of affordable mattress options across these segments is anticipated to sustain positive market momentum throughout the forecast period.

Complementing this trend, evolving consumer lifestyles and growing awareness of the therapeutic benefits associated with memory foam products are expected to further accelerate category demand in the near to medium term. Additionally, robust activity in the residential real estate sector, supported by rising household incomes and increased spending on home improvement and furnishing, is generating stronger consumer appetite for premium mattress offerings across the country.3

Indias Home and Furnishings Market14

Indias Home & Furnishings market is estimated to be 2.8 to 3.0 trillion (U.S.$34 to 36 billion) as of CY2024, projected to grow to reach 5.2 to 5.9 trillion (U.S.$63 to 71 billion) by CY2030, with 11% to 13% CAGR from CY2024 to CY2030.

The India home furnishings market, spanning furniture, textiles, wall decor, and allied residential products. Furniture is valued at 1,800 to 2,000 billion (USD 22 to 24 billion) in CY2024, and furnishings and decor alone at 790 to 860 billion (USD 9.5 to 10.4 billion) in CY2024, with furnishings and decor separately projected to grow at 12 to 14 percent CAGR to 1,630 to 1,810 billion (USD 20 to 22 billion) by CY2030 and furniture segment to 3,200 to 3,900 billion (USD 39 to 47 billion) at CAGR of 10% to 12% reflecting the broad-based structural tailwinds underpinning the sector.

Sustained market expansion is being driven by the convergence of rapid urbanization, a growing middle-class consumer base, and increasingly sophisticated preferences for aesthetically refined and functionally optimized living environments. Alongside these demand-side drivers, the deepening penetration of organized retail and e-commerce has materially improved product accessibility, while continued real estate development and government-backed housing programs are reinforcing demand across both urban and semi-urban geographies.

Indias demographic trajectory remains a compelling long-term growth catalyst. With urban populations projected to exceed 40% of the total national population by 2030, consumption patterns are undergoing a structural shift toward contemporary, space-efficient furnishing solutions suited to urban living. The proliferation of nuclear family households across metropolitan centres is further generating consistent demand for compact, multifunctional furniture and coordinated home textile offerings.

On the policy front, flagship government initiatives including the Pradhan Mantri Awas Yojana and the Smart Cities Mission are actively stimulating residential construction activity, creating meaningful opportunities for furnishing manufacturers and organized retailers alike. Simultaneously, the expansion of e-commerce and branded retail formats has democratized access to diversified product assortments across price segments, extending market reach into tier-two and tier-three cities and broadening the addressable consumer base for branded home furnishing products.

OPPORTUNITIES15

Indias Underpenetrated Home and Furnishings Market

Indias per capita spending on home and furnishings stands at USD 24 to 25, compared with approximately USD 600 in the US and USD 95 in China, leaving the category significantly underpenetrated. Rapid urbanization, with over 40% of the population projected to reside in urban regions by 2030 and continued momentum from programmes such as the Pradhan Mantri Awas Yojana and Smart Cities Mission, is compounding this opportunity alongside rising disposable incomes, which are driving a broader premiumisation trend as households upgrade from basic to design led products.

Structural Shift from Unorganised to Organised Retail

The organised segment of the home and furnishings market is expected to grow from 29% to 35% by CY2030, as consumers migrate away from local, unbranded vendors toward players offering assured quality and consistent standards.

Rapid Ecommerce and D2C Adoption

Online home and furnishings penetration is set to grow from 9% to 13% between CY2024 and CY2030, at a CAGR of 19% to 21%. The proliferation of ecommerce platforms and organised retail formats has widened access to diverse product assortments across price points, extending reach into Tier 2 and Tier 3 cities, while tools such as augmented reality configurators, virtual trials and AI driven personalisation are reducing purchase hesitation.

Physical Retail Expansion Across Tier 2 and Tier 3 Cities

Industry: Tier 2 and Tier 3 cities represent an enormous untapped opportunity for organised home and furnishings brands, where the historical absence of a branded, experiential retail presence has constrained consumer conversion.

Premiumisation, Wellness Awareness and Product Innovation

Rising health consciousness around sleep quality, reinforced by the high prevalence of back and body pain in India, is driving demand for ergonomic and memory foam solutions as functional wellness investments rather than basic commodities. This is matched by strong innovation momentum, from hybrid and smart mattresses with sleep tracking features to modular, multifunctional and environmentally friendly furnishings that address urban space constraints and rising sustainability consciousness among younger consumers.

Real Estate, Hospitality and Institutional Demand

Indias residential real estate sector grew at approximately 15% CAGR from CY2021 to CY2024, with the premium segment of Rs. 10 million and above growing at approximately 45% CAGR. The hospitality sector has similarly rebounded sharply following the pandemic.

Competitive Intensity from Organised and Unorganised Players

The dominant unorganised sector, comprising local carpenters and regional manufacturers, competes aggressively on price while offering customisation flexibility that resonates with consumers who remain highly conscious of cost, pressuring organised and branded players to compress margins even as they invest in brand building and retail infrastructure. Competitive intensity is also increasing from global brands, funded D2C startups, and traditional players investing in digital and omnichannel capabilities. Sustained market share growth requires continued investment in brand, product and customer experience.

Raw Material Cost Volatility and Supply Chain Fragmentation

Fluctuations in raw material costs (foam, wood, fabrics, and metals) impact pricing and production. Import dependent inputs are additionally exposed to INR depreciation and geopolitical risk. Dependence on imported premium materials adds supply chain volatility, while a shortage of skilled artisans in furniture and decor makes scaling high-end, customized products challenging.

Operational and Execution Risk in Physical Expansion and Delivery

Both the mattress and home furnishings categories involve bulky, oversized products that present significant last mile fulfilment challenges, particularly as ecommerce penetration extends into smaller cities. Building reliable delivery networks capable of handling large furniture and mattresses across geographically dispersed markets remains a material operational and financial constraint for players scaling nationally. Execution related challenges around location selection, lease finalisation, talent onboarding, and accurate assessment of local demand continue to exist. Delays in ramp up or lower than expected store productivity in certain locations could impact overall store level economics.

Brand Dependency Amid Rapidly Evolving Consumer Preferences

Rapidly evolving consumer preferences toward trendy designs, fast decor refresh cycles and customised solutions create demand volatility for manufacturers and retailers. Shorter product life cycles raise the risk of inventory obsolescence and markdown pressure, while rising expectations for quick delivery and responsive after sales service require continuous investment.

Macroeconomic, Consumer Sentiment and Price Sensitivity Risk

Substantial price sensitivity among large consumer segments constrains demand for premium priced branded products. With the mass segment commanding 65% of the home furnishings market, headroom for premium pricing remains structurally limited, making margin expansion a persistent challenge, particularly in Tier 2 and Tier 3 cities. A significant slowdown in urban consumption, tightening of consumer credit through EMI and BNPL channels, rising interest rates, or reduced real estate activity could moderate demand growth in the home and furnishings category, adversely affecting revenue and profitability.

COMPANY OVERVIEW

Wakefit Innovations Limited (“Wakefit” or the “Company”) is Indias largest Direct-to-Consumer (D2C) home and furnishings brand in India offering mattresses, furniture, and home decor products. The Company is driven by a core focus on product innovation and employs a multi-faceted marketing approach to continuously enhance its brand image. Incorporated on March 1, 2016 as a private limited company in Bengaluru, Karnataka, the Company converted to a public limited company in June 2025 and successfully completed its Initial Public Offering (IPO) in December 2025, listing its equity shares on Indian stock exchanges.

The Company operates on a full-stack, vertically integrated business model with end-to-end control across its value chain - from product conceptualisation, design, R&D, and engineering to manufacturing, supply chain management, logistics, and direct customer engagement. This integrated approach is further strengthened by its omnichannel retail network spanning 700+ districts across India. Notably, Wakefit holds a differentiated position as the only organized player with complete control over upstream value-chain processes in both the mattress and furniture segments, enabling faster innovation, better cost efficiencies, and enhanced customer experience. The Company is led by an experienced management team with a proven track record in the industry, and has a well-defined strategy in place to capture the significant opportunity in Indias fast-growing home and furnishings market, underpinned by a business model with a consistent track record of delivering financial growth.

PRODUCT PORTFOLIO

The Company follows a structured five-step product development cycle - Conceptualisation, Engineering, Prototyping, Production Development, and Pilot Testing.

Mattresses (61.4% of FY2026 revenue Core category)

The largest revenue contributor and core business segment, offering a diversified portfolio across comfort and technology-led solutions:

Memory Foam & ShapeSense: Designed for spinal alignment, pressure relief, and airflow optimization

EcoLatex: Natural, hypoallergenic latex mattresses with hybrid spring variants

Xpert Grid: Advanced hyper-elastic polymer grid technology for superior comfort and cooling

Dual Comfort: Reversible medium-soft and medium-firm designs

Rollup & Foldable: Portable, space-efficient solutions for urban consumers

Zense SleepTech: Smart mattresses featuring temperature regulation and Al-enabled sleep tracking Furniture (29.3% of FY2026 revenue Fastest-growing category)

Furniture is emerging as a key growth driver, supported by a portfolio of 8,000+ SKUs across engineered and solid wood products:

Beds

Sofas & Recliners

Wardrobes & Dressing Tables

Dining Sets & Chairs

Storage Solutions (TV units, cabinets, desks, shelves, etc.)

Given that the furniture market is nearly 10x larger than the mattress market, this segment offers significant long-term growth potential.

Furnishings & Decor (9.3% of FY2026 revenue)

A complementary category that drives cross-selling opportunities through lifestyle and home decor products, including:

Pillows & Cushions

Towels, Mats, Rugs & Carpets

Curtains & Bathrobes

Home Decor, Lighting

Kitchen & Tableware Accessories

This diversified portfolio enables the Company to position itself as a comprehensive home solutions brand while increasing wallet share across customers.

BRAND ARCHITECTURE

The Companys primary consumer brand, “Wakefit”, is one of Indias most recognised D2C consumer brands in the home and furnishings space. Brand building has been a central strategic priority from inception, underpinning both acquisition and retention of customers. Offering mattresses, furniture and furnishings under a single brand enables cross-selling of complementary products, up-sell higher-end products and encourages repeated customer engagement through network effects.

The Wakefit brand is associated with three core consumer promises:

(i) quality sleep and wellness solutions,

(ii) superior value for money, and

(iii) a trustworthy, customer-centric purchasing experience reinforced by Indias first industry-wide 100-day free trial and 100% refund policy for mattresses.

The Companys marketing efforts have yielded strong brand metrics - a 4.3-4.4/5 product rating across major e-commerce platforms, and repeat customer revenue representing 35.3% of overall revenue from operations. The viral ‘Sleep Internship campaign garnered 40.99 million social media views and 1.26 million applications across four seasons, demonstrating the brands cultural resonance.

MANUFACTURING

Wakefit operates a robust manufacturing network comprising five facilities with a total built-up area of approximately 6,98,835 sq. ft., strategically spread across Haryana, Karnataka, and Tamil Nadu. Its Sonipat, Haryana facility manufactures mattresses and sofas, while its two Bengaluru, Karnataka facilities focus on Fabrication, R&D activities, and accessories such as pillows, cushions, textiles, and decor products. Additionally, the Company operates two large facilities in Hosur, Tamil Nadu, dedicated to engineered wood furniture, solid wood furniture, sofas, office chairs and mattresses. This geographically diversified manufacturing footprint supports operational efficiency, product innovation, and faster fulfilment across India. The Company introduced the ‘Every Part Every Interval (EPEI) process across its manufacturing operations, enabling more precise production scheduling, reduced material wastage, and greater overall operational efficiency.

SUPPLY CHAIN AND LOGISTICS

Wakefits logistics network, as of FY2026, is structured across three tiers. A single Mother Warehouse in Hosur, spanning 1.6 lakh sq ft, serves as the primary inventory repository and main distribution point. From there, goods flow to 9 Inventory Holding Points, each ranging from 10,000 to 55,000 sq ft, which hold inventory for mattresses and marketplace serviced categories. The final tier consists of 17 Points of Delivery, each ranging from 800 to 5,600 sq ft, which act as transit hubs for last mile deliveries and also serve as bases for furniture installers.

This distribution network is backed by 5 manufacturing facilities feeding directly into it: Facility I in Sonipat, Haryana; Facility II and Facility III in Bengaluru, Karnataka; and Facility IV and Facility V in Hosur, Tamil Nadu. On the retail distribution side, the Companys MBO network, which serves as an external distribution channel, grew 30% during the year to reach 1,948 stores across 536 cities as of March 2026, with management continuing to view MBOs as strategic partners for expanding geographic reach and deepening market penetration. Its supply chain operations are integrated through SAP ERP systems, with ongoing implementation of RFID technology for real time inventory tracking.

MARKETING

Wakefits marketing strategy is built on capital-efficient brand building -- the company has managed to reduce marketing costs as a percentage of revenue even as brand recall has strengthened, with marketing spend at approximately 7.3% of revenue from operations in Q4FY26. This efficiency stems from a diversified marketing mix spanning community engagement initiatives, large-scale brand campaigns, celebrity endorsements, performance marketing, and influencer partnerships, organized around four core pillars.

Community engagement anchors the approach through two flagship, long-running programmes. The Sleep Internship, now in its fourth season, has generated 40.99 million views and 1.26 million applications, while the Great Indian Sleep Score report has reached its nine consecutive edition. Together, these properties have positioned Wakefit as a leading voice in sleep wellness rather than simply a mattress retailer.

Marketing campaigns extend this positioning through high-impact creative work such as ‘Dhamki Squad - World Sleep Day 2026, ‘Emotional Bhrashtachaar - Valentines Day 2026, ‘CID Spoof - Wedding Season 2025 ‘Biswa Swasth Aadmi “Andar ke bacche ko jagao,” “Kumbhakaran,” and “Gaddagiri”. These campaigns have been fronted by

We integrate our brand into cultural phenomena through strategic placements in topical media and advertising, aligning with current trends and cultural conversations to enhance brand relevance and engagement. Our marketing strategy focuses on cultivating high-quality, viral customer interactions to achieve significant brand visibility and meaningful engagement. This approach ensures that our marketing costs remain low while optimising our results.

Looking ahead, Wakefit plans to allocate 1,084.04 million of its IPO proceeds toward marketing and advertising expenses between FY2027 and FY2029, reinforcing brand-building efforts on top of the capital-efficient base already established.

INNOVATION AND RESEARCH

Wakefit runs a structured product development pipeline described as leveraging consumer insights to drive product development and launch industry first products. The process moves through conceptualisation, engineering, and prototyping, followed by a first quality control checkpoint on the prototype. If rejected, the prototype cycles back through process related feedback; if approved, it proceeds to production, then a pilot run, then a second quality control checkpoint. Approval at this stage leads to product launch, while product related feedback at this point loops all the way back to conceptualisation for refinement.

This R&D activity is physically anchored at Facility II in Bengaluru, Karnataka, a 37,076 sq ft facility that also handles some other categories alongside dedicated R&D activities.

PRODUCT INNOVATION HIGHLIGHTS

Wakefit has consistently leveraged product innovation to strengthen its market differentiation through advanced design and engineering capabilities. The companys core approach centres on leveraging consumer insights to drive product development and launch industry-first products, with a structured pipeline moving from conceptualisation and engineering through prototyping, quality checks, piloting, and finally product launch. Its Zense range of SleepTech, comprising Track8 (contactless sleep monitoring through heart rate, breathing, and movement analysis) and Regul8 (water-based active mattress temperature regulation), represents one of Indias most advanced consumer sleep technology offerings. The company is also pilot-testing personalised mattress technology, which aims to deliver customised firmness solutions based on individual body profiles. In furniture, Wakefit has emerged as one of the top two D2C players in Indias flat-pack furniture segment for engineered wood beds and wardrobes in FY2024, with the format enabling lower logistics costs and improved installation efficiency. Additionally, the company was among the early organised players in India to introduce roll-pack mattress technology, significantly enhancing logistics efficiency by reducing volumetric weight and transportation costs.

MANUFACTURING INNOVATION

Wakefit has integrated technology-led process innovation across its manufacturing operations to enhance efficiency, safety, and sustainability. The company deploys AI-driven safety systems, including temperature-monitoring probes and automated alert mechanisms during foam curing, to ensure operational safety and product consistency. Its CAD/CAM cloud-linked manufacturing infrastructure enables real-time design updates to be automatically communicated across machinery at all facilities, reducing manual intervention and minimizing errors. Wakefit also follows an EPEI (Every Part Every Interval) manufacturing model to optimize production cycles, reduce work-in-progress inventory, and minimize material wastage. Further, the company undertakes in-house lamination of raw boards instead of sourcing pre-laminated boards, resulting in lower input costs and greater customization flexibility. Its sustainability initiatives include recycling polyurethane foam scrap into rebonded foam, repurposing sawdust into fuel briquettes, and using reusable sofa delivery covers to reduce single-use packaging waste.

TECHNOLOGY AND DATA ANALYTICS

The Companys data architecture spans customer website interactions, CRM data, supply chain node data, and external market research. Data visualisation using Tableau and Snowflake underpins decision-making across product development, pricing, channel margins, and marketing strategy. The Company is ISO/IEC 27001:2022 certified.

CHANNEL MIX

Wakefitsomnichannel strategy has produced a deliberate and measurable evolution in its revenue mix, reflecting the Companys strategic prioritization of higher-quality, margin-accretive channels. The omnichannel ecosystem integrates both own channels and external channels, offering customers multiple touchpoints across their entire purchase journey, from discovery and exploration through in-store product trial, comparison and decision-making, purchase, and post-sales service

The share of own channels - comprising the website and COCO stores - has grown from 57.50% in FY2023 to 67.2% in FY2026, while own channel revenue in absolute terms expanded from 4,673 million in FY2023 to 10,008 million in FY2026 alone. On the own channels side, the Company operates 139 active COCO stores across experience centres, offering customers hands-on product interaction and direct engagement, complemented by a seamless online shopping experience through its website featuring easy navigation, rich content, measurement guides, and 3D renders. Simultaneously, the offline segment has undergone a structural step-up, with its revenue contribution rising from 11% in FY2023 to 42% in FY2026, underpinned by the rapid buildout of the physical retail network and its outsized impact on revenue quality and average ticket size. Beyond own channels, the Companys external channel network spans approximately 1,948 MBO stores across 453 cities in 27 states and Union Territories, with presence on major e-commerce platforms and quick commerce platforms providing additional convenience and familiarity to customers. The omnichannel model delivers four tangible outcomes: enhanced customer engagement, richer customer insights, complete control over the brand experience, and higher profitability. At an operational level, the architecture synchronizes inventory management across channels for consistent delivery timelines, integrates discovery, comparison, and validation across both offline and digital touchpoints, and serves as a strategic growth lever that expands reach and scale while enabling entry into adjacent categories. This shift is a deliberate strategic priority - own channels eliminate third-party commissions, deliver full control over the customer experience, and generate proprietary consumer data that feeds product development and CRM-driven repeat purchase activity, collectively improving both contribution margins and long-term customer lifetime value.

KEY STRENGTHS

Largest and Fastest Growing D2C Home and Furnishings Brand in India	Wakefit is the largest D2C home and furnishings company in India by revenue from operations in Fiscal 2024, and the fastest homegrown player among organised peers to surpass 10,000 million in total income within nine years of operations. Between FY22 and FY24, the Company posted a CAGR of approximately 25%, roughly 2.5 times the industry average of 9 to 11% and approximately 1.6 times the organised peer average of 15%, signalling a structurally stronger business model that is consistently winning market share.
Comprehensive Category Coverage with Proven Cross Sell Capability	Wakefit is the only D2C company in India to have scaled three distinct home and furnishings categories, mattresses, furniture, and furnishings and decor, each exceeding 1,000 million in annual revenue. Cross selling is a measurable reality: 24.2% of furnishings customers in FY2026 were already existing customers from other Wakefit categories, and 18.4% of furniture customers were already Wakefit customers.
Full Stack Vertical Integration for Margin and Quality Control	The Companys ownership of design, engineering, manufacturing, supply chain, and direct customer channels eliminates intermediary costs and provides end to end quality control. This model supports competitive pricing, higher own channel margins, and agile product innovation cycles, aided by CAD and CAM linked cloud manufacturing and SAP ERP integration for operational efficiency.
Established Omnichannel Retail Footprint	Wakefit operates today across its own website, 139 COCO Regular Stores, 1,948 MBO partner stores, and major online marketplaces. Own channels, comprising the website and COCO stores, generated 67% of revenue from operations in FY2026, and the average order value at COCO Regular Stores was 76% higher than on the website, demonstrating the offline channels role in driving ticket size premiumisation.
Proven, Viral, an< Capital Efficient Marketing Mode	Marketing expenses fell from 11.80% of revenue in FY2023 to 5.65% in FY2026, a significant compression that reflects improved brand recognition and organic pull. Differentiated marketing, including viral campaigns and celebrity endorsements, has driven strong unaided brand recall and sustained repeat customer contribution.
Technology and Data Driven Operations	The Company holds ISO/IEC 27001:2022 certification for information security management and runs a 30 member data analytics team. Its proprietary Wixy AI chatbot, A/B testing framework for website conversion optimisation, and AI driven manufacturing safety systems reflect a technology first operational philosophy
Debt Free Balance Sheet and Improving Financial Profile	As of March 31, 2026, the Company carries zero borrowings. Revenue from operations grew from 8,126 million in FY2023 to 14,889 million in FY2026, while EBITDA margin expanded from negative 10.55% in FY2023 to 15.27% in FY2026, or 2,273.9 million, demonstrating operating leverage and a clear path toward sustained profitability.

Category Leadership in an Underpenetrated Market

As incomes rise and the middle class continues to expand, the addressable home and furnishings market is expected to nearly double over the coming years, giving the category leader room to capture incremental demand at scale.

Physical Retail Expansion Funded by IPO Proceeds

The Company is deploying Rs. 1,923.11 million of IPO proceeds toward opening 117 new COCO Regular Stores and funding rent for existing stores, alongside expanding its MBO network beyond its current base of approximately 1,948 stores. The planned introduction of large format COCO Jumbo Stores, spanning 50,000 to 200,000 sq. ft., as regional flagship experience centres in key metropolitan markets.Collectively, this physical expansionis expected to lift revenue growth, average order values, and brand penetration across both metro and underserved geographies.

Structural Shift from Unorganised to Organised Retail

The organised segment of the home and furnishings market is projected to grow from approximately 29% in CY2024 to approximately 35% by CY2030, as consumers migrate from local, unbranded vendors toward branded, quality assured players, a shift that is particularly pronounced in Tier 2 and Tier 3 cities that remain underserved by organised retail today.

Premiumisation Tailwind and New Product Pipeline

Rising aspirations and dual income household formation are pushing consumers toward premium, branded products across all home categories. New launches such as the Zense SleepTech range, Ultra and Plus product lines are positioned to monetise this shift as it unfolds, rather than reflecting revenue already captured.

Rapid Online and D2C Market Growth

Online home and furnishings penetration is set to grow from 9% to 13% between CY2024 and CY2030, at a CAGR of 19% to 21%, and the broader D2C market in India is projected to reach Rs. 3,400 to 4,200 billion by CY2030, expanding the pool of demand available through digital first channels.

Emerging Institutional and B2B Demand

Indias residential real estate sector grew at approximately 15% CAGR from CY2021 to CY2024, with the premium segment of Rs. 10 million and above growing at approximately 45% CAGR, and the hospitality sector has similarly rebounded sharply. Together with the growth of corporate offices and coworking spaces, this points to a developing B2B channel alongside the core B2C business, supported by existing manufacturing scale and design capability.

IPO PROCEEDS UTILIZATION

The Company achieved a significant milestone with its successful listing on the NSE and BSE in December 2025, raising total IPO proceeds of approximately 12,889 million, comprising a fresh issue of 3,772 million and an Offer for Sale of 9,117 million. The proceeds from the fresh issue are being strategically deployed to accelerate Wakefits next phase of growth and strengthen its market leadership in Indias home and sleep solutions segment. A significant portion of the funds, amounting to 1,614.7 million, has been earmarked toward lease rentals, sub-lease rentals, and license fee payments for existing company-owned company-operated (COCO) regular stores, supporting the expansion of its offline retail footprint. Additionally, 308.4 million is being utilized for setting up 117 new COCO regular stores, further strengthening the companys omnichannel presence. The Company has also allocated 154.1 million toward the purchase of new equipment and machinery to enhance manufacturing capabilities and operational efficiency. To further strengthen brand visibility and customer acquisition, 1,084.0 million has been earmarked for marketing and advertising initiatives. The remaining 330.7 million will be utilized for general corporate purposes. These investments are expected to improve market penetration, strengthen brand equity, expand distribution reach, and support long-term sustainable growth.

KEY FINANCIAL RATIOS

Particulars	FY 2025-26	FY 2024-25	Variance %	Reason (if variance is >25%)
Debtors Turnover	364.4	74.8	387.25	Debtors turnover ratio increased during the current year due to efficient collection of trade receivables, resulting in better receivables management compared to the previous year.
Inventory Turnover	3.6	3.9	(6.37)
Debt service Coverage Ratio	2.3	1.3	78.92	Debt service coverage ratio improved due to higher earnings available for debt service during the current year as compared to the previous year.
Current Ratio	2.1	1.7	26.47	Current Ratio increased during the current year due to an increase in current assets, primarily on account of investible cash generated from IPO proceeds, thereby strengthening the Companys short-term liquidity position.
Debt Equity Ratio	0.24	0.5	(55)	Increase in profits during the current year resulted in a rise in shareholders equity, which consequently led to a decrease in the debt-to-equity ratio.
Operating Profit Margin (%)	7.5	1.4	435.7	Operating Profit Margin improved during the current year due to an increase in revenue from operations and better control over operating expenses, resulting in higher operating profits compared to the previous year.
Net Profit Margin (%)	12.7	(2.7)	562.31	Net Profit Margin increased during the current year primarily due to higher Profit After Tax, which was supported by a one-time deferred tax credit, along with improved operational performance compared to the previous year.
Return on Capital Employed (ROCE) (%)	8.76%	(0.68%)	1384.24	Return on Capital Employed (ROCE) increased during the current year primarily due to higher earnings before interest and tax (EBIT), driven by improved revenue and operational performance, resulting in better returns on the capital employed compared to the previous year.

KEY PERFORMANCE INDICATORS

Particulars	FY 2025-26	FY 2024-25
Revenue from Operations (INRmn)	14,889.4	12,736.9
Revenue from Operations Growth	17%	29%
Reported EBITDA	1,819.6	591.0
% Margin	12%	5%
Profit After Tax (INRmn)	1,891.8	(350.0)
Profit After Tax % Margin	13%	(3%)
Return on Net Worth %	16.71%	(7%)
Return on Capital Employed	8.49%	(1%)
Net working capital days	2.2	3.8
Revenue by category (INRmn)
Mattresses	9,138.7	7,813.7
Furniture	4,357.5	3,516.9
Furnishings	1,393.2	1,406.3
Total	14,889.4	12,736.9
Volume (mn units)
Mattresses	9,15,402	7,93,348
Furniture	4,20,001	3,51,492
Furnishings	15,65,972	14,55,037
Total	29,01,375	25,99,877
COCO Stores	139	105

• The Company delivered a strong financial performance in FY 2025-26, with revenue from operations growing 17% to 14,889 million from 12,737 million in FY 2024-25, reflecting robust demand and sustained operational efficiency. Operating EBITDA expanded 524% to 1,122.6 million while Reported EBITDA was at 1,819.6 million, underpinned by improved cost control and scale benefits, while PBT grew to 911 million and PAT rose to 1,891.8 million (include 981 mn deferred tax benefit). The Companys Return on Capital Employed stood at 8.76%% in FY 2025-26 compared to (0.68%) in FY 2024-25, reflecting efficient deployment of capital toward profitable growth. Return on Net worth grew to 16.71%, rising from (7%) in FY 2024-25 The Net Working Capital Days reduced from 3.8 days in FY 2024-25 to 2.2 days in FY 2025-26.

• The quality of earnings improved materially across operating metrics. Gross margins expanded by 18.5% year-on-year at 55.8% in FY 2025-26, driven by manufacturing efficiencies, reduced material wastage through the EPEI (Every Part Every Interval) process, and greater utilisation of automated precision machinery. Improved capacity utilisation at the Hosur furniture manufacturing facility contributed to a threefold jump in EBITDA on a year-on-year basis. Employee benefit expenses remained largely stable at 1,662 million in FY 2025-26 versus 1,657.4 million in FY 2024-25, while other expenses saw a slight increase in absolute terms from 4,755.2 million to 4,820.1 million over the same period - together evidencing meaningful operating discipline. The Company returned to profitability at the PAT level, recording 1,891.8 million in FY 2025-26 against a loss of (350) million in FY2025.

• The offline retail network continues to demonstrate strong unit economics. Same-store sales growth for stores operational for at least one year is around 14%, with more mature stores in the 18-24 month cohort delivering even stronger performance. Average order value at COCO stores is significantly higher than the online channel, driven by in-store product trials, trained staff upselling, and direct customer engagement. Building on this momentum, the Company plans to accelerate store openings in FY2027.

HUMAN RESOURCES

Wakefits human capital philosophy is anchored in building a high-performance culture that supports long-term business continuity and operational excellence. People are a core strategic asset for Wakefit. The Companys human capital strategy is designed to attract, develop, and retain talent across its rapidly expanding operations - from manufacturing and supply chain to technology, marketing, retail, and corporate functions.

The Company operates with a lean, results-oriented organizational structure, with the senior leadership team bringing significant depth of experience across relevant industries. The Company also extends ESOPs across all designations, reflecting its commitment to broad-based employee ownership and alignment of interests. A healthy and supportive work environment, supported by diverse engagement programs and ISO 9001:2015-certified quality and compliance processes, underpins the Companys approach to talent retention and workforce development.

The Company continues to strengthen its human capital ecosystem through targeted workforce initiatives. Its Gurukul Programme supports vocational training and creates employment opportunities for carpenters, fitters, customer support executives, and retail staff, contributing to community development while building a skilled talent pipeline. Further, the ESOP 2019 Scheme aligns employee interests with long-term business performance, aiding talent retention and leadership continuity.

As on 31st March, 2026, the Company has a total of 2178 permanent employees on record.

INTERNAL CONTROLS

Wakefit Innovations Limited has established a strong internal control framework aligned with the scale, nature, and complexity of its operations to safeguard assets, ensure accurate financial reporting, enhance operational efficiency, and maintain regulatory compliance. The Companys SAP-enabled ERP system provides integrated controls across procurement-to- pay, order-to-cash, and record-to-report processes through automated workflows, segregation of duties, and approval hierarchies, reducing manual errors and fraud risks. An independent internal audit function periodically reviews controls across manufacturing, supply chain, retail, and finance operations, with findings reported to the Audit Committee. The Company also maintains strong information security standards, supported by its ISO/IEC 27001:2022 certification, and regularly updates cybersecurity protocols to address evolving risks. In addition, a structured compliance framework ensures timely adherence to statutory requirements related to GST, income tax, customs, provident fund, ESI, and labour laws, with any delays escalated to senior management. Oversight from the Board and its committees, including the Audit Committee and Risk Management Committee, further strengthens governance practices. Notably, the Statutory Auditors have not issued any qualifications on the Financial Information ending March 31st, 2026, reflecting managements view that its internal controls are adequate and effective.

RISK MANAGEMENT

Wakefit operates within a dynamic, consumer driven and highly competitive environment, making proactive risk management a critical part of its strategic and operational decision making. To strengthen enterprise risk governance, the Company constituted a Risk Management Committee on June 16, 2025, in accordance with SEBI Listing Regulations. The Committee identifies, assesses, monitors and mitigates material risks across financial, operational, sectoral, sustainability, ESG, information and cybersecurity areas, while overseeing the formulation and periodic review of the risk management policy, mitigation measures, internal control systems and business continuity planning. Regular reporting to the Board keeps the framework robust and aligned with the Companys evolving business strategy.

Risk k	Mitigation
Inflation and Economic Factors	The Company diligently monitored macroeconomic indicators to proactively adapt business strategies to changing conditions. It curated a diverse product range across price tiers to cater to varied customer budgets, while implementing strategic cost control measures to enhance operational efficiency. These initiatives collectively strengthened resilience, optimised resources, and positioned the business to capture emerging market opportunities effectively.
Contract Manufacturing and Third-Party Goods Dependency	The Company has built a robust, geographically diverse supplier ecosystem of contract manufacturers and third-party vendors to reduce dependence on single sources. Through rigorous vendor due diligence, strategic sourcing agreements, and stringent oversight of own brand merchandise from design to quality checks, it ensures consistent supply, favourable terms, and adherence to brand and compliance standards, even with outsourced manufacturing.
Geographic Revenue Concentration M	The Company is strategically expanding its geographic presence by leveraging strong due diligence in existing catchments to unlock untapped potential within current states, while selectively exploring new markets. Regular market analysis and assessment of regional economic conditions enable timely responses to potential downturns, ensuring sustainable growth and a balanced regional expansion strategy aligned with long term business objectives.
Seas Sales at nal Fluctuations at	The Company ensures efficient inventory management by proactively monitoring and optimising stock levels to meet seasonal demand without overstocking. Flexible staffing strategies, including temporary hires during peak periods, enhance operational agility. Additionally, diversified product offerings with steady year-round demand help balance seasonal fluctuations, ensuring consistent sales performance and improved resource utilisation across varying market conditions.
Intense Market Competition ?=	The Company employs strategic pricing models with competitive entry points, a unique merchandise mix, and strong own brands for a differentiated edge. Superior service, personalised shopping, and an engaging Loyalty Programme foster long term customer relationships. Investments in a robust ecommerce platform expand market reach, enhancing accessibility and capturing growing online demand while strengthening overall customer experience.
Legal Regu latory and Challenges	The Company strengthened its compliance programmes by enhancing internal controls to ensure strict adherence to applicable laws and regulations. It maintained transparent communication with stakeholders on legal and regulatory matters, fostering trust and proactively managing reputational risks. These measures reinforce governance standards and safeguard the Companys integrity in an evolving regulatory and business environment.

CAUTIONARY STATEMENT

The Management Discussion and Analysis may contain some statements describing the Companys views of the industry, objectives, projections, estimates or expectations, which may be ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ substantially or materially from those either expressed or implied in the Statement, depending on the factors that could affect the Companys operations, such as economic conditions affecting demand and/or price conditions in the domestic and overseas markets in which the Company operates, changes in government regulations, tax laws and other statutes and incidental factors. The Company undertakes no responsibility to publicly amend, modify or revise any forward-looking statements, whether as a result of any subsequent developments, new information, future events, or otherwise.