Bengaluru-based furniture and appliance rental platform Rentomojo is preparing for an Initial Public Offering (IPO) scheduled within the next 18 months. This announcement follows a notable financial recovery and sustained profitability for the company. Rentomojo aims to submit its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) by 2025, as confirmed by founder and CEO Geetansh Bamania.
The company is currently assessing the size and timeline for the IPO, which is anticipated to unfold in the coming months. This move marks a pivotal moment for India’s consumer rental economy, where Rentomojo has established itself as a key player.
Journey from Crisis to Profitability
Founded in 2014 by Geetansh Bamania, Achal Mittal, Ajay Nain, and Gautam Adukia, Rentomojo offers furniture and home appliances through an online subscription model. Operating across 16 Indian cities, the company claims to have served approximately 450,000 customers since its inception.
However, the path to profitability was fraught with challenges. The COVID-19 pandemic severely impacted the company’s financial trajectory. By December 2020, Rentomojo faced dire circumstances, reportedly having only a 15–20-day cash runway. This crisis prompted immediate cost-cutting measures, including salary reductions and layoffs.
Management recognized the need to reduce reliance on external capital. This shift led to a renewed focus on disciplined operations and sustainable growth, which proved critical for the company’s recovery.
Strong Financial Performance in FY24
Rentomojo’s turnaround was evident in its financial results for the fiscal year FY24. The company reported revenue of INR 195.8 crore, reflecting a 59% increase from the previous year. Additionally, net profit surged to INR 22.1 crore, a significant rise from INR 6.2 crore in FY23.
In contrast, major competitor Furlenco reported a widening loss of INR 130.2 crore and a revenue decline to INR 151.9 crore in FY24, further solidifying Rentomojo’s prominent position within the sector. The company credits its improved performance to technology-driven efficiencies, with automated approvals for customer queries increasing from 30% to over 70%, significantly enhancing customer experience.
The operational improvements have resulted in gross margins exceeding 60% and an impressive inventory occupancy rate of 85%.
Looking forward to FY25, Rentomojo aims to achieve a 40% growth in revenue, targeting an EBITDA of INR 100 crore and net profits of INR 40 crore. The company’s revenue is currently evenly split between furniture and appliance rentals.
Investor Interest and Future Prospects
Rentomojo has raised a total of USD 93.2 million (approximately INR 800 crore) to date, with the latest Series D and D1 funding rounds in February 2024 generating INR 210 crore (around USD 25 million). This funding was led by the Edelweiss Discovery Fund Series – I and ValueQuest Scale Fund, encompassing both primary capital and secondary share sales.
As of now, the company’s valuation stands at USD 110 million (nearly INR 945 crore), and sources suggest that the upcoming funding round could elevate this valuation, given Rentomojo’s strong financial metrics and ten consecutive quarters of profitability.
Major investors such as Accel (21.42%) and Chiratae Ventures (13.77%) are expected to participate in pre-IPO funding, highlighting confidence in Rentomojo’s future prospects.
As Rentomojo prepares for its IPO, its ability to maintain momentum, attract investor interest, and navigate the evolving consumer landscape will be closely monitored. With a successful FY24 behind it and ambitious targets for FY25, Rentomojo’s public offering represents a significant milestone, not only for the company itself but also for the subscription-based rental economy in India.