India's direct-to-consumer (D2C) home and furnishing giant, Wakefit, is set to launch its much-anticipated initial public offering (IPO) on 8 December. The company, which positions itself as the largest D2C home brand by revenue as of FY24, is seeking to raise ₹1,289 crore. The price band has been fixed at ₹185 to ₹195 per share.
The IPO Details and Valuation Conundrum
At the upper end of the price band, Wakefit's implied market capitalization will stand at ₹6,373 crore. This valuation places it broadly in line with its established peer, Sheela Foam, which commands a market cap of ₹6,482 crore. However, a deeper look reveals a significant premium. Wakefit is seeking a valuation of about 5 times its sales, which is more than double Sheela Foam's multiple of 2 times sales.
The IPO comprises a fresh issue of ₹377 crore and an offer-for-sale (OFS) component of ₹912 crore by promoters and investors. Post-IPO, the promoter shareholding will dilute from 43% to 36.8%. The company plans to utilize the net proceeds to aggressively expand its offline footprint, earmarking funds for setting up 117 new company-owned stores (COCO), lease payments, marketing, and capital expenditure.
Operational Strengths and Growth Trajectory
Wakefit's journey from an online mattress seller to a full-scale home solutions brand is its core narrative. It now operates across three key categories—mattresses, furniture, and furnishings—each generating over ₹100 crore in revenue in FY24. Its revenue grew at a stellar 24.9% CAGR between FY22 and FY24, significantly outpacing industry growth.
A key strength is its vertically integrated model, controlling design, manufacturing, and distribution. This omnichannel approach, spanning its own website, COCO stores, marketplaces, and multi-brand outlets, fuels cross-selling. Notably, 17.9% of furniture customers in Q2 FY26 were sourced from other categories. The focus on offline expansion is strategic, as the average order value in COCO stores is nearly 80% higher than on its website.
Red Flags: Losses, Inventory, and Attrition
Despite robust topline growth, the financial picture shows cracks. While the company turned operationally profitable, with EBITDA improving from a loss of ₹86 crore in FY23 to a profit of ₹91 crore in FY25, its net losses widened to ₹35 crore in FY25 from ₹15 crore in FY24.
More concerning is the sharp rise in inventory levels. Inventory as a percentage of revenue surged from 22.8% in FY24 to 34.7% as of September 2025. This has led to a weakening inventory turnover ratio and repeated write-downs, hinting at potential demand softness or planning gaps. Furthermore, the business grapples with a consistently high attrition rate, which stood at 47.3% in FY25, though it showed a recent improvement.
The company also faces industry-wide risks like new quality control orders for furniture, geopolitical supply chain issues for imported raw materials, and persistent cost pressures from logistics and marketing.
Investor Takeaway: Growth vs. Premium
Wakefit presents a classic growth-versus-valuation debate. On one hand, it is a fast-growing, digitally-native brand disrupting a traditional industry and rapidly expanding its offline presence. On the other, its widening losses, elevated inventory, and high attrition raise legitimate questions about the sustainability of its growth and the justification for its valuation premium over a profitable market leader like Sheela Foam.
The company's success in the public markets will hinge on its ability to translate top-line expansion into consistent bottom-line profitability, manage its working capital more efficiently, and navigate the intense competition in India's burgeoning home furnishing space. The auditor's note on gaps in the audit trail also underscores the need for stronger governance as it enters the listed arena.
