Bengaluru-based furniture and appliance rental platform Rentomojo is preparing for an initial public offering (IPO) expected within the next 18 months. This announcement signals a significant recovery for the company, which has achieved sustained profitability following challenges posed by the COVID-19 pandemic. Rentomojo intends 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 of Rentomojo, stated that the company is currently assessing the size and timing of the IPO, which is anticipated to take shape in the coming months. This move highlights a pivotal moment for Rentomojo in India’s growing consumer rental economy.
From Challenges to Profitability
Founded in 2014 by Bamania alongside co-founders Achal Mittal, Ajay Nain, and Gautam Adukia, Rentomojo operates by leasing furniture and home appliances through an online subscription model. The startup provides services across 16 Indian cities and claims to have catered to nearly 450,000 customers since its inception.
The journey to profitability was fraught with obstacles. The onset of the pandemic nearly jeopardized Rentomojo’s financial stability. By December 2020, the company reportedly faced a cash runway of only 15–20 days, necessitating immediate cost-cutting measures, including salary reductions and layoffs. This crisis prompted the management to pivot away from reliance on external funding.
This transformative period led the company to adopt a more disciplined approach towards operations, focusing on sustainable growth.
FY24 Performance Highlights
The company’s financial turnaround became evident in FY24, when Rentomojo reported a revenue of INR 195.8 crore, reflecting a 59% increase from FY23. Additionally, it achieved a net profit of INR 22.1 crore, a significant rise from INR 6.2 crore the previous year.
In contrast, major competitor Furlenco reported widening losses amounting to INR 130.2 crore alongside a revenue decline to INR 151.9 crore in FY24. This divergence underscores Rentomojo’s enhanced position within the sector.
The company credits its improved performance to technology-driven efficiencies, with automated approvals for customer queries rising from 30% to over 70%. This enhancement has reduced turnaround times and improved customer experience. Furthermore, Rentomojo has achieved gross margins exceeding 60% and maintains a high inventory occupancy rate of 85%.
Looking ahead, Rentomojo aims to close FY25 with a targeted 40% revenue growth, aspiring to reach an EBITDA of INR 100 crore and net profits of INR 40 crore. The revenue stream is evenly split between furniture and appliance rentals, indicating a balanced business model.
The company operates 20 warehouses and utilizes third-party logistics for delivery operations. Its attractive offerings, including free relocation services and a flexible subscription model, have particularly resonated with young professionals and migrants seeking alternatives to high upfront furnishing costs.
Bamania highlighted the affordability of their model, stating, “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 in Rentomojo remains strong, with the company having raised approximately USD 93.2 million (around INR 800 crore) to date. The latest funding rounds in February 2024, known as Series D and D1, brought in around INR 210 crore (approximately USD 25 million). This capital influx was led by Edelweiss Discovery Fund Series – I and ValueQuest Scale Fund, encompassing both primary capital and secondary share sales.
The most recent valuation for Rentomojo stood at USD 110 million (approximately INR 945 crore). As the company prepares for its IPO, it is anticipated that upcoming funding rounds could further increase its valuation due to its impressive financial recovery and consistent profitability over ten quarters.
As Rentomojo moves toward its IPO, the company’s ability to maintain momentum, attract investor interest, and navigate the evolving consumer landscape will be closely monitored. With a strong performance in FY24 and ambitious goals for FY25, the impending IPO represents a significant milestone not only for Rentomojo but also for the subscription-based rental economy in India.
