In today’s Finshots, we take a look at the Wakefit IPO, which opens for subscription today and closes on 10th December, 2025.

But before we begin, here’s a quick 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 ball game. That’s why we built Ditto, 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 here.

Now, on to today’s story.

The Story

When Ankit Garg and Chaitanya Ramalingegowda launched Wakefit back in 2016, they weren’t chasing a furniture empire. They simply imagined a Bengaluru-based brand that could help Indians sleep better, straight from maker to customer without the middlemen.

Fast forward nine years, and that modest dream has ballooned into India’s largest D2C (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. That’s not bad for a company that began with mattresses and a belief in good sleep. And now, it is 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 (OFS). Meaning, the founders and early investors, including Peak XV Partners, 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. 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 (often called COCO stores). The remaining 35% flows in through external marketplaces like Amazon and Flipkart, plus multi-brand offline outlets. And that mix matters. 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. Wakefit is a full-stack, vertically integrated player. In simple terms, it designs, manufactures, distributes, and sells everything 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 ₹1,273 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 organised peers.

Yet beneath this facade of rapid growth sits a more uncomfortable reality — profitability hasn’t quite arrived.

Take the latest half-year results for FY26. Up to September 2025 (H1FY26), Wakefit’s net profit margin stood at 4.9%, translating to around ₹35 crore in profit. If you annualise that, you could assume about ₹70 crore 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 FY25, the company actually logged a net loss of ₹35 crore (let that sink in). In FY24, a loss of ₹15 crore. And in FY23, a hefty ₹145 crore down the drain.

So yeah, it looks like a turnaround, but a confusing one at that. And it begs two questions:

1. What caused this dramatic swing of over ₹100 crore in just six months?
2. And why was FY25 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 COCO stores in FY23 to 105 by FY25, and it also manages over 1,500 multi-brand outlets. 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 FY25, that hit Wakefit hard. Its depreciation expense shot up to ₹96 crore, 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 benefits expenses and marketing spends.

Sidebar for context (a nuance worth noting): Wakefit’s COCO stores are all leased, not owned. But under Ind AS 116 (India’s version of Global Accounting Standards), long-term leases must be treated almost like owned assets for accounting purposes. So when Wakefit signs, say, a 5-year lease, it must show this asset on its books called a Right-of-Use (ROU) asset, representing its right to use the store for 5 years, show a lease liability, meaning “we owe rent payments for 5 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 Wakefit 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 Wakefit is raising from the IPO will go into opening more COCO stores and lease expenditure 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 scrutinise quarter after quarter.

Sure, in the first half of FY26 (H1 FY26), even though Wakefit increased its store count to 125 (from 105 at FY25-end), depreciation stayed nearly flat. That suggests that the stores opened in FY24 have matured enough to start generating returns without fresh capex dragging profitability. But once the IPO-funded stores start operating, that comfortable picture could change again.

And then there’s the return on capital employed (ROCE) — a simple way to judge how efficiently a company uses shareholders’ money. In FY25, Wakefit’s ROCE was -0.68%. That’s not a good look. But the more worrying sign lies in its net asset value (NAV) per share. Despite all the growth and buzz, this number has actually slipped from ₹19.48 in FY23 to ₹16.96 in FY25. In plain speak, the value created for shareholders is eroding faster than Wakefit is churning out profits.

And finally, the valuation question — is the ask of ₹195 (upper end of the IPO price band) per share fair?

Wakefit is seeking a valuation of around ₹6,300 crore post listing. For a company that will likely trade at a P/E (Price-to-earnings ratio) north of 40–50x based on FY26 projections, that’s a pretty high premium.

To put things in perspective, its closest listed peer, Sheela Foam trades at 77x P/E. But Sheela Foam is a far bigger business with ₹3,439 crore in revenue versus Wakefit’s ₹1,273 crore, stronger operating profit margins (8.32% EBITDA vs Wakefit’s 7.13%), and a much longer operating history. So despite Wakefit’s narrative of being more efficient, the numbers suggest otherwise.

So yeah, 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.

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 the capital it deploys. Whether it can pull off that transition will decide if this IPO becomes a winning case study or a cautionary tale about the limits of the D2C model in capital-heavy industries.

Until then…

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