Bengaluru-based furniture and appliance rental platform Rentomojo is preparing for an Initial Public Offering (IPO) within the next 18 months, marking a significant milestone in India’s consumer rental market. The company has confirmed that it will file its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) by 2025. Founder and CEO Geetansh Bamania stated that the company is currently assessing the IPO’s size and timeline, which is expected to unfold in the coming months.
Resilience Post-Pandemic
Founded in 2014 by Bamania, alongside Achal Mittal, Ajay Nain, and Gautam Adukia, Rentomojo has pioneered an online subscription model for renting furniture and home appliances. The startup operates in 16 cities across India and has serviced approximately 450,000 customers since its inception. However, its journey to profitability faced significant challenges, particularly during the COVID-19 pandemic, which nearly jeopardized its financial stability.
By December 2020, Rentomojo reportedly had a cash runway of only 15 to 20 days, leading to immediate cost-cutting measures, including salary reductions and layoffs. This critical period compelled the management to pivot away from reliance on external capital, prompting a shift toward disciplined operations and sustainable growth.
Strong Performance in FY24
The company’s turnaround became evident in the fiscal year 2024, during which Rentomojo achieved revenues of INR 195.8 crore, representing a 59% increase from the previous fiscal year. Net profits surged to INR 22.1 crore, up 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 for FY24, further solidifying Rentomojo’s competitive position.
The company’s improved performance is attributed to enhanced operational efficiencies, driven by technology. Automated approvals for customer queries increased from 30% to over 70%, significantly reducing turnaround times and enhancing customer experiences. As a result of these operational changes, Rentomojo has reported gross margins exceeding 60% and an impressive inventory occupancy rate of 85%.
Looking ahead, Rentomojo aims to close FY25 with a targeted revenue growth of 40%, an EBITDA of INR 100 crore, and net profits of INR 40 crore. The company currently derives an even revenue split between furniture and appliance rentals.
Investor Confidence and Future Prospects
Rentomojo has successfully raised a total of USD 93.2 million (approximately INR 800 crore) to date, with the latest funding rounds in February 2024 contributing INR 210 crore (around USD 25 million). This funding was led by the Edelweiss Discovery Fund Series – I and ValueQuest Scale Fund, including both primary capital and secondary share sales.
The company’s valuation was last reported at USD 110 million (approximately INR 945 crore), and indications suggest that the upcoming funding round could elevate this figure, given Rentomojo’s strong financial performance and ten consecutive quarters of profitability. Major investors such as Accel (21.42%) and Chiratae Ventures (13.77%) are also expected to partake in pre-IPO funding.
As Rentomojo prepares for its public offering, its journey illustrates a notable success story within the subscription-based rental economy, which has historically faced challenges regarding unit economics. The company’s ability to sustain its momentum and adapt to changing consumer needs will be crucial as it approaches this significant milestone.
With a solid performance in FY24 and ambitious targets set for FY25, Rentomojo’s IPO is anticipated to not only benefit the company but also highlight the growing potential of the subscription rental market in India.
