At a first glance Navalny loose presidential campaign at the very beginning: Central Election Committee refused to register him due to his felony sentence. At the same time for Kremlin it could look like the signs of fear that Navalny will defeat Putin during the campaign.
However, I think that everything is more complicated than this. It was crustal clear from the beginning that law banned Navalny from participation. As a lawyer he had no illusion about it. But he used pretext of election campaign to raise funds and build huge network of supporters around the country. I think that is a huge success of Alexey.
As for the Kremlin, they don’t need to give Navalny time on central TV where he could spread his agenda throughout the country. That is why, fir now, it”s a win-win solution for all sides.