Wakefit: Year-On-Year Growth and IPO Developments

Wakefit, a brand specialising in home and sleep solutions, achieved nearly 30% growth year-on-year during the fiscal year ending March 2025. Nonetheless, the company’s net losses doubled in this timeframe, even as preparations for its IPO are underway.

According to its annual financial statements filed with the Registrar of Companies (RoC), Wakefit’s operational revenue increased to Rs 1,274 crore in FY25 from Rs 986 crore in FY24. Established in 2016, Wakefit functions as a direct-to-consumer (D2C) brand that offers a range of sleep and home products, including mattresses, pillows, furniture, and home improvement items. These products are available through its website, physical stores, and various third-party marketplaces. Sales of these products serve as the sole source of the company’s income.

In addition to product sales, the firm generated Rs 31 crore from interest on deposits and profits from investment sales, raising its total income to Rs 1,305 crore in FY25, an increase from Rs 1,017 crore in FY24.

Expense Analysis and Net Losses

The cost of materials consumed accounted for 43% of the overall expenses, which rose to Rs 573 crore in FY25. Employee benefit costs experienced a 23% increase to Rs 166 crore. Various overhead costs, including legal, advertising, IT, and postage, resulted in a total expenditure rise of 29.8% to Rs 1,340 crore. As a result of heightened advertising and operational costs, Wakefit’s net loss expanded to Rs 35 crore, compared to Rs 15 crore in FY24. However, the company still maintained an EBITDA positive figure of Rs 59.5 crore for the year. Its return on capital employed (ROCE) and EBITDA margins stood at 4.67% and -5%, respectively.

Current Assets and Revenue Generation

By the end of FY25, Wakefit’s total current assets were worth Rs 537 crore, while it spent Rs 1.05 to generate every rupee of operating revenue.

IPO and Market Position

Earlier this month, the company received approval from SEBI for its IPO, which encompasses a fresh equity issue of Rs 468.2 crore along with an offer for sale (OFS) of 5.84 crore shares by promoters and existing investors. Founders Ankit Garg and Chaitanya Ramalingegowda, alongside investors such as Peak XV, Verlinvest, Investcorp, Redwood Trust, SAI Global, and Paramark, are likely to partially offload their stakes through this public offer.

While the advantages of being a pioneer in the online ‘sleep solutions’ market have diminished, Wakefit has effectively expanded its operations without significant setbacks in a challenging market. The elevation in losses may be linked to the introduction of offline stores; nevertheless, the firm has managed expenses adeptly while achieving substantial growth. The new product categories added also appear to enhance value, and anecdotal evidence suggests that the portfolio provides quality alternatives for numerous consumers. There is hope that the company will not treat public markets similarly to venture capitalists and offer a price that provides value to new investors, unlike some recent startups that have dispersed risks among a broader set of investors while benefiting earlier backers and founders. The term offer for sale, which has become prevalent in the market over the past two years, could possibly become synonymous with overpriced offerings if public listings continue at this current trajectory.