Bengaluru-based furniture and appliance rental platform Rentomojo is preparing for an initial public offering (IPO) expected within the next 18 months. The company’s decision follows a significant financial recovery and consistent profitability, marking a pivotal moment for the consumer rental sector in India. Rentomojo plans to file its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) by 2025.
Geetansh Bamania, the founder and CEO, has indicated that the company is actively assessing the IPO’s size and timeline, with developments anticipated in the coming months.
From Crisis to Profitability
Founded in 2014 by Bamania, along with Achal Mittal, Ajay Nain, and Gautam Adukia, Rentomojo operates an online subscription model to lease furniture and home appliances across 16 Indian cities. The startup has reportedly served nearly 450,000 customers since its inception.
The journey to profitability was challenging, particularly during the COVID-19 pandemic, which severely impacted its financial standing. By December 2020, the company faced a critical situation with only a 15–20-day cash runway. This prompted urgent cost-cutting measures, including salary reductions and layoffs, as management sought to stabilize operations.
During this crisis, Rentomojo shifted its focus from reliance on external capital to establishing more disciplined operations aimed at sustainable growth. This transformation has been recognized as a turning point for the company.
Strong Financial Performance in FY24
The company’s turnaround was evident in the fiscal year 2024, where it reported revenue of INR 195.8 crore, reflecting a remarkable 59% increase from the previous year. Additionally, Rentomojo achieved a net profit of INR 22.1 crore, a significant rise from INR 6.2 crore in FY23.
In contrast, competitor Furlenco recorded a widening loss of INR 130.2 crore with a decline in revenue to INR 151.9 crore in FY24, further highlighting Rentomojo’s competitive position within the sector. The company credits its improved performance to operational efficiencies driven by technology, with automated approvals for customer queries increasing from 30% to over 70%. This enhancement has reduced turnaround times and significantly improved customer experiences.
The operational overhaul has resulted in gross margins exceeding 60% and a high inventory occupancy rate of 85%.
Looking ahead, Rentomojo aims to close FY25 with a projected 40% revenue growth, targeting an EBITDA of INR 100 crore and net profits of INR 40 crore. Currently, the company’s revenue is evenly split between furniture and appliance rentals.
Rentomojo operates 20 warehouses and utilizes third-party logistics for delivery. Its services, including free relocation and a flexible subscription model, have gained popularity, particularly among young professionals and migrants who seek alternatives to high upfront furnishing costs.
Bamania explained, “Furnishing a 1BHK costs around INR 2 lakh—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
To date, Rentomojo has raised approximately USD 93.2 million (around INR 800 crore), with the latest funding rounds in February 2024 bringing in 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.
The company’s last valuation stood at approximately USD 110 million (around INR 945 crore). Given its strong performance and a track record of 10 quarters of profitability, sources suggest that the upcoming funding round could further enhance its valuation.
Major investors, including Accel (21.42%) and Chiratae Ventures (13.77%), are expected to participate in the pre-IPO funding, reflecting continued investor confidence.
As Rentomojo prepares for its IPO, the company’s ability to maintain momentum, attract investor interest, and compete in a rapidly evolving consumer landscape will be closely monitored. With a robust FY24 performance behind it and ambitious targets for FY25, Rentomojo’s IPO represents a significant milestone not only for the company but also for the burgeoning subscription-based rental economy in India.
