Wakefit IPO: Issue size, exit bonanza, financials and key risks decoded

Wakefit has also proposed a pre-IPO placement of up to Rs 93.64 crore. If executed, the fresh issue will shrink accordingly.

Wakefit Innovations, the direct-to-consumer (D2C) mattresses and home solutions startup, has filed draft papers for an initial public offering that includes a fresh issue of shares worth Rs 468.2 crore and an offer for sale (OFS) of up to 5.83 crore shares by early investors and founders. The company plans to deploy the primary proceeds to beef up its offline play and double down on brand building.

While Rs 468 crore will come in as fresh capital, the total IPO size could swell to Rs 1,500–2,000 crore (about $200 million), thanks to a large secondary component. Wakefit’s public debut comes nearly a decade after it was launched out of a Bengaluru apartment with the promise of making better sleep more affordable.

Big exits, bigger multiples

Wakefit’s early institutional backers are using the IPO to partially cash out. Peak XV Partners (formerly Sequoia Capital India), which came in back in 2018, is set to offload up to 2.5 crore shares. Belgian investment firm Verlinvest is offering 1.02 crore shares.

Co-founders Ankit Garg and Chaitanya Ramalingegowda will also trim their stakes, selling 77.3 lakh and 44.5 lakh shares respectively. Other selling shareholders include Investcorp (via two funds), Paramark KB Fund, Redwood Trust, and SAI Global India Fund. Nitika Goel, an early backer and selling shareholder, will exit 7.2 lakh shares.

The real eye-popper, however, is the exit value that the founders are sitting on. Based on their share acquisition cost — Rs 0.02 per share for Garg and Rs 0.04 for Ramalingegowda — the IPO gives them astronomical returns. Garg’s exit value is 4,393x that of Investcorp, and 4,134x Verlinvest. Ramalingegowda’s payday is similarly outsized.

Peak XV’s exit value is 4.3x higher than Investcorp’s and 4x that of Verlinvest. The calculation compares the the weighted average acquisition price of each shareholder.

Wakefit has also proposed a pre-IPO placement of up to Rs 93.64 crore. If executed, the fresh issue will shrink accordingly.

Where the IPO money will go

Wakefit will use Rs 82.15 crore to roll out 118 new company-owned stores, including a large-format "jumbo" outlet, taking its offline count to 216. Another Rs 145.19 crore is earmarked to pay leases and license fees across its existing 98 stores over the next four years.

Then comes the marketing blitz: Rs 108.4 crore is being set aside for brand-building campaigns, with digital performance and offline media handled by HiveMinds. Another Rs 15.4 crore will go into new equipment and machinery, and the remaining proceeds will be used for general corporate purposes.

Much of this capex is planned for FY27–FY28, with a horizon stretching through FY29.

Financial report card

In FY24, Wakefit clocked operating revenue of Rs 986 crore — a 21 percent jump from Rs 812.6 crore in FY23. The company also pulled off a dramatic narrowing of net loss: from Rs 145.6 crore in FY23 to Rs 15 crore in FY24, aided by fatter gross margins and a sharper eye on marketing spends.

But profitability remains a work in progress. For the nine months ended December 2024 (9M FY25), the company reported a net loss of Rs 8.8 crore. It continues to burn cash in operations and has flagged this as a key risk in its DRHP as it aggressively pushes into offline retail.

Key risks

Mattresses made up over 62 percent of Wakefit’s total revenue in 9M FY25, making it highly dependent on a single category. The company also highlighted brand risk, forecasting errors, and its reliance on third-party logistics and marketplaces like Amazon and Flipkart as potential weak links.

Its five manufacturing units — spread across Karnataka, Tamil Nadu, and Haryana — could face operational disruption due to power outages, equipment breakdowns, or labour-related issues. Wakefit’s rapid retail expansion adds a layer of execution risk, especially with large-format stores entering the mix.

As of the DRHP filing, the company had 19 pending tax litigations amounting to Rs 9.7 crore. While these aren’t classified as material under SEBI norms, they still exist. Wakefit has also filed two criminal complaints — one against former employees in Kolkata and another against a current staffer in Patna — both involving alleged financial fraud.

Payouts to top management

Up to the date of filing, co-founder and CEO Ankit Garg drew ₹85.5 lakh in FY25 remuneration, while executive director Ramalingegowda earned ₹89.6 lakh. CFO Navesh Gupta received ₹31.1 lakh during the same period. Nitika Goel, a selling shareholder, is not listed as a key managerial personnel in FY25.

In FY24, Wakefit paid Rs 16 crore in lease rentals for its company-owned stores. While some rental contracts involve promoter-linked entities, the DRHP doesn’t disclose the specific value of related-party transactions.

Bankers on board

Axis Capital, IIFL Capital Services, and Nomura Financial Advisory are the book-running lead managers for the IPO. The company plans to list on both the BSE and NSE, pending regulatory approval.

If successful, Wakefit’s public debut will be one of the largest in India’s D2C and furniture space — and a defining moment in its journey from scrappy mattress disruptor to omnichannel retail powerhouse.