Wakefit IPO Review: Is the Market Overpaying for One Strong Half-Year of Profits?

Wakefit Innovations is a home solutions brand that helps people set up their homes with mattresses, furniture, and furnishings across India. The company is now coming out with a ₹1,288.89 crore IPO in the ₹185-₹195 price band, with a GMP of about ₹36, which signals an expected 15-20% listing gain but is only an unofficial and highly volatile indicator, not a guarantee of returns.

In this blog, you will get a clear walkthrough of Wakefit’s business model, why it is raising money, key strengths and risks, how it compares with peers like Sheela Foam, its valuation, financial track record, and what all this means for different types of investors.

IPO Overview

• IPO Date: December 8 to December 10, 2025
• Total Issue Size: ₹1,288.89 crore
• Price Band: ₹185 to ₹195 per share
• Minimum Investment: ₹14,820
• Lot Size: 76 Shares
• Tentative Allotment Date: December 11, 2025
• Listing Date: December 15, 2025 (Tentative)
• GMP: The GMP for the Wakefit IPO is ₹36, reflecting an 18.46% gain over the issue price, according to Chittorgarh.com.

Disclaimer: GMP is an unofficial indicator and is subject to market volatility.

How Wakefit Makes Money

Wakefit is a “home solutions” brand that sells almost everything for a home, mattresses, beds, sofas, furniture, bedsheets, curtains, and décor, across India.​ It designs products in-house, manufactures many of them in its own factories, and then sells them to customers, so it earns on both making and selling the products.​

• The company follows a “full‑stack vertical integration” model, meaning it controls most steps from design to delivery instead of depending on many outside vendors.​ It uses CAD/CAM software in multiple plants to design and build products, roll‑packs mattresses into boxes, and ships furniture as flat‑packs to cut transport and storage costs and make delivery easier even in smaller towns.​
• On the sales side, it uses an “omnichannel” model, selling through its own website, its own COCO stores, online marketplaces, and multi‑brand outlets (MBOs).​ Direct‑to‑consumer (D2C) sales from its own site and own stores bring in over 60% of revenue, which improves margins because there is no distributor in between.​
• To grow, Wakefit uses a “flywheel” – it spends on brand building and a 100‑day mattress trial to build trust, uses customer data to improve products, and then cross‑sells furniture and furnishings to the same buyers.​
• This loop has created a strong repeat base; in H1 FY26, repeat customers contributed about 35% of revenue, meaning more than one‑third of sales came from people who had already bought from Wakefit earlier.

Objectives of the IPO

Remember: only the Fresh Issue of ₹377.18 crore goes to the company; OFS money goes to existing shareholders who are selling.

• Opening 117 new COCO stores (₹30.84 crore): The company plans to roll out 117 new company‑owned stores. This shows a clear bet on offline expansion to deepen reach beyond the current 395 cities. More stores mean more brand presence, higher touch‑and‑feel comfort for customers, but also higher fixed costs like rent and staff.​
• Paying lease, rent, and license fees (₹161.47 crore): This amount will be used to pay rentals and lease deposits for existing company‑owned stores and other facilities over the next few years. Since Wakefit leases all its offices, warehouses, factories, and stores instead of owning them, this spend is key to keep operations stable and avoid cash strain from rising rentals.​
• Brand and marketing spend (₹108.40 crore): Over the next three years, this money will go into advertising, digital campaigns, and other brand‑building activities. The idea is to stay on top of mind in a crowded market where many small and big brands are fighting for the same customer, but doing it in a more efficient way – already, ad spend has fallen as a percentage of revenue even as sales have grown.​
• Capex for new machinery – Manufacturing Facility IV (₹15.41 crore): This is for new machines at the Hosur (Tamil Nadu) plant, mainly for furniture capacity and efficiency. Better machines can lower wastage, improve quality, and support the planned store and category expansion without squeezing margins too much.​
• General corporate purposes (balance amount): The remaining money will be used for day‑to‑day needs like working capital (short‑term money locked in inventory and receivables), tech investments, and other regular business requirements.

Strengths:

• Wakefit is growing fast: revenue moved from about ₹820 crore in FY23 to roughly ₹1,300 crore in FY25, which means sales went from ₹100 to about ₹155-₹160 in just two years, much faster than the overall organized home and furnishings market.​
• The business has sharply improved profits: after losses of ₹145.7 crore in FY23 and ₹35 crore in FY25, it earned a profit of ₹35.6 crore in H1 FY26, with EBITDA margin rising to 14.25% and net profit margin to 4.91%, so the company now keeps around ₹4.9 as profit from every ₹100 in sales.​
• Efficiency and brand strength stand out: net working capital days dropped from about 20.4 to just 1.04 days by September 2025, repeat buyers formed ~35% of H1 FY26 revenue, and Wakefit is the largest D2C home and furnishings brand with over ₹100 crore each in mattresses, furniture, and furnishings - showing tight cash control plus a sticky, scaled franchise across categories.​

Risks:

• Heavy dependence on mattresses: About 60-61% of Wakefit’s revenue in H1 FY26 comes from mattresses, so any demand shift, pricing war, or quality issue in this one category can meaningfully hurt overall sales and profit.​
• Rising fixed costs and input risk: The entire network (stores, warehouses, offices) is leased, with rent jumping from ₹4.53 crore in FY23 to ₹26.75 crore in H1 FY26, while material costs are ~47% of sales and many inputs are imported, so higher rents, raw‑material spikes, or currency swings can quickly squeeze margins.​
• Control, cash flow, and compliance concerns: The company had a negative operating cash flow of ~₹20.46 crore in FY23, faces ~30 tax‑related cases with potential liability of ~₹37 crore, and auditors have flagged gaps like weak audit trails and mismatched bank submissions earlier, all of which need tighter systems as it becomes a listed company.​

For detailed information, visit Wakefit’s official IPO page at INDmoney.

Peer Comparison

As per the RHP, the company’s listed peer is Sheela Foam.

Source: RHP, internal calculation

• Sheela Foam is about 2.5-3x bigger in total sales.
• Wakefit now earns ₹14.25 in operating profit on every ₹100 of sales in H1 FY26 vs about ₹9-11 for Sheela Foam, but from a smaller base.
• Wakefit effectively runs debt‑free now, which lowers interest risk.

Wakefit is smaller but growing faster, has recently better operating margins and working‑capital efficiency than Sheela Foam, but lacks the long profit track record that Sheela Foam has built over many years. Investors are being asked to pay a higher multiple for a newer brand that is still proving that these strong half‑year numbers can hold through cycles.

IPO Valuation

At the upper price of ₹195, the post‑issue valuation works out to a Price-to-Earnings (P/E) of a bit over 90 times, if one annualises H1 FY26 profit of about ₹35.6 crore and assumes similar performance in H2 as well. A P/E of 90+ means investors are paying more than ₹90 today for every ₹1 of profit the company is expected to make in the current year; this is higher than Sheela Foam’s P/E of about 77 times.​

The Price-to-Sales (P/S) ratio is close to 5 times, versus about 2.2 times for Sheela Foam. This means investors are paying ₹5 for every ₹1 of Wakefit’s sales compared with about ₹2.2 per ₹1 of sales for Sheela Foam, which reflects a premium for Wakefit’s faster growth, D2C leadership, and better recent margins, but also builds in a lot of future success.​

Finally, the IPO uses SEBI’s Regulation 6(2), which is meant for companies that do not meet the standard 3‑year average profit threshold under Regulation 6(1). Put simply, Wakefit does not yet have the long‑term profit track record that a normal mainboard IPO is supposed to have, so buyers are consciously betting on the recent sharp improvement continuing and compounding from here.​

Who’s Making Money from the IPO?

The OFS portion of about ₹911.71 crore is largely an exit or partial exit by early investors and some promoters who are cashing out part of their holdings. Among the promoters, CEO Ankit Garg is selling shares worth about ₹150.73 crore and co‑promoter Chaitanya Ramalingegowda is selling about ₹86.82 crore.​

On the institutional side, Peak XV Partners (earlier Sequoia India) is the largest seller at about ₹397.31 crore, with around 9.5x return on its investment, followed by Verlinvest at about ₹198.77 crore (2.4x), Paramark KB Fund I at about ₹49.8 crore (2.4x), Redwood Trust at about ₹2.69 crore (11.4x), and SAI Global India Fund I at about ₹8.06 crore (2.3x). There are also smaller selling shareholders like Nitika Goel exiting about ₹17.53 crore worth of shares.​

The big takeaway is that a large part of the issue is existing investors monetising gains after years of holding, while the company itself is raising a relatively smaller amount for expansion and working capital. This does not automatically mean something negative, but it does raise a fair question: at a P/E above 90x, new investors are entering at a much higher price than early investors are exiting at, so return expectations need to be realistic and more long‑term.​

Also Read: From Top Mutual Funds to Global Giants: Who’s Betting on Wakefit IPO?

Industry Outlook

India’s home and furnishings market, which includes mattresses, furniture, and home textiles, is worth around ₹2.8–₹3 lakh crore in 2024 and is expected to grow at around 11% per year till 2030. Furniture is the largest sub‑segment, making up about two‑thirds of the market, while mattresses and furnishings take the rest; the space is still highly fragmented, with roughly 71% of the market in the hands of unorganized players like local carpenters and small shops.​

Three big growth drivers help brands like Wakefit. First, rising income and urbanisation: by 2030, India’s per capita Gross National Income is projected to cross $3,600, meaning more families will spend on better homes and comfort instead of just basics. Second, the share of organised players is expected to rise from about 29% in 2024 to around 35% by 2030 as people shift from unbranded furniture to known brands that offer consistent quality, warranties, and design. Third, online and D2C growth: the online share of the home and furnishings market is expected to move from about 9% to 13% by 2030, giving digital‑first brands like Wakefit a long runway to reach smaller cities without the same store costs as legacy players.​

At the same time, the sector faces real challenges. Furniture and mattresses are bulky and fragile, which makes transport and last‑mile delivery costly and tricky, especially in smaller towns. The market has low standardisation and high price sensitivity; people usually buy these products rarely and shop around for discounts, which makes it harder to build long‑term loyalty and stable repeat demand unless the brand really stands out on comfort, service, and trust.​

Analyst View

Putting it all together, Wakefit looks like a high‑growth, execution‑heavy consumer brand that has finally turned profitable and is now asking for a premium valuation as an emerging leader in a large, growing market. The positives are clear: strong revenue growth, sharp margin, and cash‑flow improvement in H1 FY26, efficient working capital, strong repeat customer base, D2C leadership, and a credible plan to use fresh money on stores, machinery, and brand building.​

The questions are also serious: the valuation is aggressive versus Sheela Foam, most of the issue is OFS, profits are recent and not yet tested through a full cycle, and the business is still heavily dependent on one category (mattresses) while carrying rising fixed costs from leases and stores. The IPO seems like a growth bet rather than a stable compounding story at this stage.​

For informed investors with surplus cash and a medium‑ to long‑term horizon, this IPO can be seen as a play on the formalisation of India’s home market and the shift from offline, unbranded purchases to integrated D2C‑plus‑omnichannel brands. But anyone entering at these valuations should be ready for volatility, accept the risk that current high margins may normalise as offline share rises, and track future quarters closely to see if H1 FY26 is the new normal or an early peak.

For a seamless application process, visit the INDmoney IPO page.

Disclaimer

Source: Wakefit's RHP. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Please be informed that merely opening a trading and demat account will not guarantee investment in securities in the IPO. Investors are requested to do their own independent research and due diligence before investing in an IPO. Please read the SEBI-prescribed Combined Risk Disclosure Document prior to investing. This post is for general information and awareness purposes only and is nowhere to be considered as advice, recommendation, or solicitation of an offer to buy or sell, or subscribe for securities. INDstocks is acting as a distributor for non-broking products/services such as IPO, Mutual Fund, and Mutual Fund SIP. These are not exchange-traded products. All disputes with respect to the distribution activity would not have access to the Exchange investor redressal forum or the Arbitration mechanism. INDstocks Private Limited (formerly known as INDmoney Private Limited) does not provide any portfolio management services, nor is it an investment adviser. Logos above are the property of respective trademark owners, and by displaying them, INDstocks has no right, title, or interest in them. SEBI Stock Broking Registration No: INZ000305337, Trading and Clearing Member of NSE (90267, M70042) and BSE, BSE StarMF (6779), SEBI Depository Participant Reg. No. IN-DP-690-2022, Depository Participant ID: CDSL 12095500, Research Analyst Registration No. INH000018948 BSE RA Enlistment No. 6428.