Bengaluru-based furniture and appliance rental platform Rentomojo is preparing for an initial public offering (IPO) within the next 18 months, driven by a notable financial recovery and sustained profitability. The company has announced plans to submit its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) by 2025, marking a significant milestone for India’s consumer rental market. According to Geetansh Bamania, founder and CEO of Rentomojo, the company is currently assessing the size and timing of the IPO, anticipated to unfold over the coming months.
From Crisis to Profitability
Founded in 2014 by Geetansh Bamania, Achal Mittal, Ajay Nain, and Gautam Adukia, Rentomojo offers a subscription model for leasing furniture and home appliances. Operating in 16 Indian cities, the startup has served nearly 450,000 customers since its inception. However, the path to profitability was challenging. The COVID-19 pandemic significantly impacted the company, reportedly leaving it with only a 15 to 20-day cash runway by December 2020. This situation prompted immediate cost-cutting measures, including layoffs and salary reductions.
This crisis proved to be a turning point for the management, which shifted its focus from reliance on external funding to more disciplined operations and sustainable growth strategies.
Financial Performance in FY24
The turnaround was evident in FY24, with Rentomojo achieving a revenue of INR 195.8 crore, a 59% increase from the previous fiscal year, and a net profit of INR 22.1 crore, up from INR 6.2 crore in FY23. In contrast, its main competitor, Furlenco, reported a widening loss of INR 130.2 crore and a decline in revenue to INR 151.9 crore during the same period, further highlighting Rentomojo’s growth.
The company attributes this success to technology-driven efficiencies, noting that automated approvals for customer inquiries have risen from 30% to over 70%. This improvement has led to reduced turnaround times and enhanced customer satisfaction. Gross margins have exceeded 60%, with a high inventory occupancy rate of 85%.
Looking ahead, Rentomojo anticipates closing FY25 with a 40% revenue growth, aiming for an EBITDA of INR 100 crore and net profits of INR 40 crore. Currently, its revenue is evenly split between furniture and appliance rentals. The company operates 20 warehouses and utilizes third-party logistics for deliveries. Its appeal among young professionals and migrants is bolstered by free relocation services and a flexible subscription model, offering a cost-effective alternative to high upfront furnishing expenses.
Bamania explained, “Furnishing a 1BHK costs around INR 200,000—almost five to six times the average monthly salary. Our model provides affordability and flexibility, which traditional financing doesn’t.”
Investor Confidence and Future Prospects
Rentomojo has raised USD 93.2 million (approximately INR 800 crore) to date, with the latest funding rounds in February 2024 bringing in INR 210 crore (around USD 25 million). This funding was led by Edelweiss Discovery Fund Series – I and ValueQuest Scale Fund, including both primary capital and secondary share sales.
The company’s last known valuation was USD 110 million (approximately INR 945 crore). Sources suggest that the upcoming funding round could lead to a valuation increase, given its strong financial performance and consistent profitability over the last ten quarters. Major investors include Accel and Chiratae Ventures, both of whom are expected to participate in pre-IPO funding.
As Rentomojo prepares for its IPO, it stands out in the competitive furniture and appliance rental market, which has historically struggled with unit economics. The company’s ability to maintain momentum, attract investor interest, and navigate a changing consumer landscape will be closely monitored. With a robust FY24 behind it and ambitious targets for FY25, the upcoming IPO represents a significant milestone for both Rentomojo and the subscription-based rental economy in India.
