Wakefit IPO: Is Wakefit’s IPO a good long term bet for high-risk investors? – News Air Insight

ET Intelligence Group: Wakefit Innovations, a mattress and furniture maker, plans to raise ₹377.2 crore through a fresh issue to cover lease payment, marketing and advertising expenses and to fund capital expenditure. It will also raise ₹911.7 crore through an offer for sale. The promoter group’s stake will fall to 36.8% after the IPO from 43%. It has aggressively opened stores in the past two years. However, it has turned profitable in the six-months to September 2025 after posting losses in the previous three years. Raw materials constitute around 45% of expenses. With no long-term contracts with suppliers, it is exposed to price volatility and supply chain disruption. Given these factors, investors with high-risk appetite can consider the IPO with a long-term view.

Business

Incorporated in 2016, Wakefit Innovations is a direct-to-consumer home and furnishing company. It has three segments-mattresses, furniture and furnishings. The company sells products across 700 districts across 28 states and six union territories. Its stores grew to 125 in September 2025 from 23 in FY23. According to Redseer, it was among the top three companies in the organised mattress market in terms of revenue in FY24. The mattresses segment contributes 61% to total revenue. About 2/3rd of its revenue comes from its own channels and rest comes from e-commerce or quick commerce platforms or multiple brands outlets.

Financials
Revenue grew by 25.2% annually to ₹1,273.7 crore between FY23 and FY25. Its net loss narrowed to ₹35 crore in FY25 from ₹145.7 crore in FY23. Ebitda margin grew to 7.1% in FY25 from negative 10.6% in FY23. Net working capital days dropped to just four days in FY25 from 20 days in FY23, significantly lower than listed peer Sheela Foam, which averages around 39-41 days. For the six months ended September 2025, Wakefit’s revenue and net profit were ₹724 crore and ₹35.6 crore, respectively.

Valuation

The company has just started reporting profit in the six-month period to September. Considering the post-IPO equity and annualised profit for FY26, the price-to-earnings (P/E) works at 90, compared with 200 for its listed peer, Sheela Foam. Its price-to-sales (P/S) multiple is four, compared with two, for Sheela Foam.