Pod Insights Finshots Daily The Wakefit IPO explained About this episode In today’s episode on 8th December 2025, we take a look at the Wakefit IPO, which opens for subscription today and closes on 10th December, 2025.
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Transcript 0:00 Speaker 00 Hello folks, you're tuned into Finshots Daily. In today's episode, we take a look at the Wakefit IPO which opens for subscription today and closes on 10 September 2025.
0:13 Speaker 00 But before we begin, here's a quick side note from our co-founder. When we started Finshots, our aim was to make finance simple and accessible for everyone. Soon we realised that understanding finance is just one of the challenges. Making smart decisions, especially around insurance, is a whole different ballgame. That's why we built a tool, a platform that makes insurance simple. No jargon, no spam, just honest advice from advisors who are only here to help you find the right plan. So if you haven't already, go get your free personalised insurance advice by clicking the link in the description. Alright, on to today's story. When Ankit Garg and Chaitanya Ramalinga Gauda launched Wakefit back in 2016, they weren't chasing a furniture empire.
0:56 Speaker 00 They simply imagined a Bengaluru-based brand that could help Indians sleep better, straight from maker to customer, without the middlemen. Now, fast forward nine years and that modest team has ballooned to India's largest direct-to-consumer home furnishings player. Wakefit now clocks over 1,270 crore in annual revenue and reaches more than 700 districts across the country. Now that's not bad for a company that began with mattresses and a belief in good sleep. And now, it's gearing up for an IPO worth 1,289 crore. About 377 crore will come in through a fresh issue of shares, while the larger chunk will be an offer for sale.
1:38 Speaker 00 Meaning the founders and early investors will cash out some of their stake. So, as India's sleep unicorn looks for public validation, the question is, should you give Wakefit yours? And more importantly, what's in it for you? To understand that, you first need to know what the company actually does. At its core, Wakefit runs a straightforward business. It sells mattresses, furniture and home essentials like towels, mats, rugs and dinnerware. Nothing overly fancy, but the interesting bit is that it's the only D2C home furnishings brand in India that has scaled all three categories with each crossing 100 crore in annual revenue.
2:18 Speaker 00 If you break that down, mattresses make up 61% of its sales, furniture accounts for 28% and the rest furnishings contribute 11%. Wakefit sells all this stuff by following an omnichannel approach. About 65% of its revenue comes from its own channels. Its website and company-owned company-operated stores, that's called as cocoa stores. The remaining 35% flows in through external marketplaces like Amazon and Flipkart, plus multi-brand offline outlets. Unlike pure online players who live and die by marketplace algorithms and commissions, Wakefit spreads its risk and has more control over pricing and customer experience. Then there's another advantage.
3:01 Speaker 00 Wakefit is a full-stack vertically-integrated player. In simple terms, it designs, manufactures, distributes and sells everything by itself. By cutting out intermediaries, it can experiment faster, tweak products based on feedback and keep more margin for itself. You could look at the numbers to get a sense of this. Wakefit's revenue from operations rose from 812 crore in FY23 to 1273 crore in FY25. That's a CAGR of roughly 25% and a pace the company says is about 1.6x higher than the average among its organized peers. Yet beneath this facade of rapid growth sits a more uncomfortable reality.
3:47 Speaker 00 Profitably hasn't quite arrived.
3:50 Speaker 00 Take the latest half-year results for FI26. Up to September 2025, Wakefit's net margin stood at 4.9%, translating to around 35 crore rupees in profit. If you analyze that, you could assume about 70 crore rupees in net profit for the year, assuming the business keeps running the same way. But, here's the catch. Once you look at past profits, the latest numbers begin to raise eyebrows. In FI25, the company actually logged a net loss of 35 crore rupees. I know, let that sink in. In FI24, a loss of 15 crore rupees. And in FI23, a hefty 145 crores down the train.
4:32 Speaker 00 So, yes, it looks like a turnaround, but a confusing one at that. And it begs two questions. What caused this dramatic swing of over 100 crore rupees in just six months? And why was FI25 loss-making despite a 29% jump in revenue from operations compared to the previous year? Turns out, Wakefit's omnichannel strategy is partly coming back to bite it. Let's explain. The company has been on an expansion spree since 2022, opening retail stores at a rapid pace. For context, it went from just 23 cocoa stores in FI23 to 105 by FI25. And it also manages over 1,500 multi-brand outlets.
5:16 Speaker 00 On paper, that looks like a distribution muscle most traditional players would envy. But, here's the thing. When you open stores, you also have to record depreciation on them. And in FI25, that hit Wakefit hard. Its depreciation expenses shot up to 96 crore rupees, which is nearly 50% higher than the previous year. And that majorly dented its ability to report profits, apart from other factors such as increased employee benefit expenses and marketing spends. Now, here's a little sidebar for context, and this is a nuance worth noting. Wakefit's cocoa stores are all leased and not owned. But under IND AS 116, that's India's version of
5:59 Speaker 00 Global accounting standards, long-term leases must be treated almost like owned assets for accounting purposes. So, when Wakeford signs, say, a five-year lease, it must show this asset on its books, called a right-of-use asset, representing its right to use a store for five years, show a lease liability, meaning we owe rent payments for five years, and reduce or depreciate the value of that asset every year over the lease period. So, the higher depreciation you see isn't because Wakeford bought new equipment, it largely reflects the accounting cost of leasing its stores over time. Now, this matters going forward because half of the fresh money that Wakeford is raising from the IPO
6:40 Speaker 00 will go into opening more cocoa stores and lease expenditures for existing ones, which means one thing, more depreciation. And while this doesn't hurt cash flow in the short run, it does hurt reported profits. The very numbers investors scrutinize quarter after quarter. Sure, in the first half of FY26, even though Wakeford increased its store count to 125, from 105 to FY25 to end, depreciation stayed nearly flat. That suggests that stores opened in FY24 have matured enough to start generating returns without fresh KPEX dragging profitability. But, once the IPO-funded stores start operating, that comfortable picture could change again.
7:23 Speaker 00 And then, there's a return on capital employed, that's ROCE, a simple way to judge how efficiently a company uses shareholders' money. In FY25, Wakeford's ROCE was minus 0.68%. Now, that's not a good look, but the more worrying sign lies in its net asset value per share. Despite all the growth and buzz, this number has actually slipped from 19.48 rupees in FY23 to 16.96 rupees in FY25. Now, in plain speak, the value created for shareholders is eroding faster than Wakeford is churning out profits. And finally, the valuable question, is the ask of 195 rupees,
8:06 Speaker 00 that's the upper end of IPO price band, per share fair? Now Wakefit is seeking a valuation of around 6,300 crore post-listing. Now for a company that will likely trade at a P E north of 40 to 50 times based on FY26 projections, that's a pretty high premium. To put things in perspective, its closest listed peer, Sheila Foam, trades at 77 times its P E. But Sheila Foam is a far bigger business with 3,439 crore in revenue versus Wakefit's 1,273 crore. Stronger operating profit margins, that's 8.32% EBITDA versus Wakefit's 7.13% and a much longer operating history.
8:49 Speaker 00 So despite Wakefit's narrative of being more efficient, the numbers suggest otherwise. So yes, Wakefit is undeniably a solid growth story. It has scaled faster than peers, grabbed market share in a category still waiting to mature and built a distribution network in a few years that legacy players took decades to assemble. But the IPO lands at a moment when Wakefit has to answer a tougher question. Can it turn that scale into sustainable profitability and real returns on capital? So if you're thinking of betting on Wakefit, it might be purely on the hope of continued revenue growth and future margin improvement, not on the strength of today's financial performance. And that's okay if you're a growth investor. It just demands an honest acknowledgement of the risks.
9:34 Speaker 00 But you also have to remember that Wakefit is moving from being a venture-backed growth rocket to a public company with actual accountability for its capital it deploys. Whether it can pull off that transition will decide if the IPO becomes a winning case study or a cautionary tale about the limits of the D2C model in capital-heavy industries. All right, folks, I will see you tomorrow. Have a marvelous Monday. Thank you for listening to today's episode. And if you want to share your feedback or suggestions, do drop us an email to [email protected] . Until next time.
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