Rentomojo: profitable rental leader, but cash-hungry assets and one-off profit flatter the IPO pitch

1. IPO Overview

Rentomojo Limited is listing on the mainboard on BSE and NSE through a 100% book-built offer opening September 9, 2026 and closing September 11, 2026. The offer pairs a ₹1,500.00 million fresh issue with an offer for sale (OFS, meaning shares sold by existing owners) of up to 27,365,529 shares. At the live band of ₹384-404, the OFS is worth about ₹10,508.36-11,055.67 million and the total raise is about ₹12,008.36-12,555.67 million. Pre-issue capital is 100,400,342 shares of ₹1 face value. Promoter holding pre-issue is 14.69% and will stay below 20% post-offer, so non-promoter shareholders will fund the minimum promoter contribution. The unusual flags are three: no listed peer exists in India or globally, FY2026 profit includes a large one-time tax credit, and the group discloses current liabilities exceeding current assets by ₹911.73 million. At ₹404, post-issue market value is about ₹42,061.70 million and post-issue P/E (price to earnings) is about 40.3x on reported PAT. RoNW (return on net worth, meaning profit as % of shareholder funds) is 43.51% for FY2026.

2. What the company does

Rentomojo sells access, not products. A customer pays a refundable deposit plus a fixed monthly fee to use a bed, sofa, fridge or washing machine. Rentomojo delivers, installs, repairs, relocates and takes back the item.

Revenue is recurring. The customer subscribes, usually for about 18 months. Income is recognised over the contract. Rental fees dominate. Delivery, installation and inspection fees add a small top-up.

The chain is full-stack and asset-heavy. Rentomojo owns the assets. It does not run a marketplace.

How the loop works

1. Procurement. It buys from 252 suppliers including Haier, Wakefit and Livpure. It also sells private-label fridges and washing machines made with Dixon Technologies.
2. Asset management. Each item is tracked by serial number. A proprietary asset intelligence engine forecasts demand and returns across 20 warehouses.
3. Fulfilment. Own logistics and trained technicians deliver and install.
4. Subscription lifecycle. It scores risk, collects monthly, repairs, upgrades and relocates.
5. Re-commerce. On return, it refurbishes and re-rents the same item. Multi-cycle reuse extends life and cuts fresh capex.

Growth maths is simple. Revenue rises with live subscribers, subscription length, items per user and revenue per item.

The business lines

Furniture rentals. This is the largest base. It covers beds, mattresses, sofas, wardrobes, dining sets and study tables. High ticket size and shifting pain make renting attractive. Refurbishment quality decides redeployment success.

Appliance rentals. This covers refrigerators, washing machines, air conditioners, televisions and microwaves. Maintenance is bundled. Private-label appliances give control over quality and lifecycle cost.

Water purifier rentals. This is service-heavy and strategic. Filters need scheduled replacement. Rentomojo offers automated replacement with zero service charge. Its private-label purifier rents at about ₹391 per month. It uses the same service network.

Revenue mix has stayed stable. Recurring subscriptions were 97.90% of revenue in FY2026.

The customers

The buyer is the urban renter. Young professionals, students and mobile workers in 29 cities including Bengaluru, Mumbai, Hyderabad, Delhi, Pune and Chennai. They prefer low upfront cost and flexibility over ownership.

Repeat behaviour is strong. Repeat rate was 50.41% in FY2026. Items per user (IPU) rose to 2.83. Average revenue per item (ARPI) rose to ₹6,252.80. Subscription length held near 18 months.

The story is deepening, not just widening. More users arrive. Each user takes more items. Each item yields more.

The economics and the metrics that matter

Profit hinges on utilisation. Assets must stay on rent. Returns must refurbish cheaply and re-rent fast. Collections must stay tight.

Occupancy stayed above 82%. It was 83.34% in FY2026. Refurbishment cost rose to ₹190.29 million as the fleet grew. Revenue realisation efficiency improved to 99.00%.

Operating leverage is visible. Revenue doubled from FY2024 to FY2026. EBITDA stayed above 40%. Reported PAT margin jumped to 26.95%.

Part of the FY2026 jump reflects a ₹366.43 million deferred tax credit. Clean margin is lower. Scale comes from 20 warehouses, 82 experience stores (up from 14 in FY2024) and 252 suppliers. Tech tools include Mojodesk for tickets and MojoVaahan for routes.

Competition and what to watch

Rentomojo claims 42%-47% of subscription revenue and 50%-55% of live subscribers in FY2025. Named rivals are House of Kieraya, CityFurnish, AVA Lifestyle, Livpure Smart Homes and Waterwala Labs.

Growth bets are omni-channel stores, Tier-2 and Tier-3 entry, tech spend, and new categories like water purifiers, baby products and laptops. The key test is replication. Can new cities deliver the same occupancy and refurbishment cost as Bengaluru and Mumbai?

3. Use of Funds

Fresh proceeds of ₹1,500.00 million will fund:

• ₹700.00 million for repayment or prepayment of certain borrowings plus accrued interest
• ₹425.00 million for lease rental or license fees for warehouses and experience stores
• Balance for general corporate purposes (amount not disclosed)

OFS proceeds go to selling shareholders, not the company. Sellers include promoter Geetansh Bamania, investors like Accel India IV (Mauritius), Edelweiss Discovery, IDG Ventures India Fund III, ValueQuest, Madison India, Chiratae, GMO entities and others, plus individuals.

4. Financials Overview

All figures are restated consolidated, ₹ in million, full years. No stub period is disclosed.

Revenue grew 38.0% in FY2025 and 45.5% in FY2026. EBITDA margin held above 40%. Reported PAT margin expanded sharply, but FY2026 includes a one-time tax credit. Leverage fell on equity infusion, not debt paydown. Deep dive follows.

5. Financial Analysis

This is an asset-heavy subscription business. The call rests on clean earnings, cash conversion, receivables and funding.

FY2026 profit is boosted by a large deferred-tax credit

Rentomojo reported FY2026 PAT of ₹1,042.99 million, but this includes a ₹366.43 million deferred-tax credit arising from recognition of deferred tax assets on brought-forward losses and unabsorbed depreciation. Current tax expense was nil. Excluding this deferred-tax uplift, profit before tax was ₹676.56 million, equivalent to 17.5% of revenue from operations, versus the reported PAT margin of 26.95%. This should not, however, be treated as a fully normalised after-tax margin because no current tax was charged.

Growth is bought with marketing, manpower and refurbishment

Revenue rose strongly. Costs rose with it. Performance marketing jumped 86.3% to ₹209.48 million in FY2026 from ₹112.44 million. Contractual manpower rose 54.3% to ₹380.21 million from ₹246.49 million. Refurbishment (repairs to plant and machinery) rose 27.7% to ₹190.29 million from ₹148.99 million. Depreciation is the heaviest drag. It rose to ₹704.71 million in FY2026 from ₹301.30 million in FY2024. It is now 18.2% of revenue. This is structural. More assets mean more depreciation every year.

Growth has come with a rapidly rising operating cost base

Revenue has grown strongly, but several operating costs have risen sharply alongside it. Performance marketing increased 86.3% to ₹209.48 million in FY2026 from ₹112.44 million in FY2025. Contractual manpower costs increased 54.3% to ₹380.21 million, while refurbishment costs rose 27.7% to ₹190.29 million. Depreciation and amortisation are also a significant structural cost for the business. They increased from ₹301.30 million in FY2024 to ₹704.71 million in FY2026 and represented about 18.2% of FY2026 revenue from operations. Of the FY2026 amount, ₹490.17 million related to property, plant and equipment and ₹208.32 million to right-of-use assets. Given that Rentomojo must own or lease a large pool of rental assets to grow, a substantial depreciation burden is inherent to the model.

Cash is operationally positive but never free

Gross trade receivables increased 79.6%, from ₹370.03 million in FY2024 to ₹664.65 million in FY2026. Over the same period, credit-impaired receivables increased from ₹130.16 million to ₹218.94 million. They therefore accounted for 32.9% of gross trade receivables at the end of FY2026. The ageing profile deserves attention: ₹108.92 million of FY2026 receivables had been overdue for more than three years. The company carried a total expected-credit-loss allowance of ₹249.06 million, equivalent to 113.8% of the credit-impaired balance. However, that allowance is calculated across the overall receivable book, so it should not be described as a direct 113.8% provision against impaired receivables alone.

6. Valuation Analysis

Earnings multiple is the right lens. This is a profitable operating company. Book value suits lenders, not renters. At ₹384-404, pre-issue P/E on reported basic EPS of ₹10.42 is about 36.9x-38.8x. That understates the true cost. Fresh shares of about 3.71-3.91 million lift share count to about 104.11-104.31 million. Post-issue EPS on reported PAT falls to about ₹10.00-10.02. Post-issue P/E is about 38.4x-40.3x. On clean PAT of ₹676.56 million, EPS is only about ₹6.49-6.50. Clean P/E is about 59.2x-62.2x. RoNW of 43.51% and NAV of ₹28.65 are also flattered by the same tax credit. P/B on pre-issue NAV is about 13.4x-14.1x. No listed peer exists to set a premium or discount. On absolute terms, the price pays a high multiple for earnings that are one-third one-off, for a business that has never produced free cash flow and carries ₹1,875.90 million of debt. It looks demanding.

7. Peer Analysis

DRHP states no listed company in India or globally is comparable. No peer multiple table is possible. Comparison is limited to one private rival disclosed in the filing.

House of Kieraya is close on scale to Rentomojo, with FY2026 revenue of ₹3,704.30 million versus Rentomojo's ₹3,869.88 million. Kieraya's revenue growth has been faster, growing from ₹1,395.60 million in FY2024 to ₹3,704.30 million in FY2026, a CAGR of approximately 63%, compared to Rentomojo's CAGR of approximately 42% over the same period.

8. Moat

The moat is real but narrow. Owning assets, refurbishing in-house, tracking each serial number and re-renting across cycles is hard to copy fast. Scale at 42%-47% revenue share, 20 warehouses, 82 stores and proprietary dispatch and ticketing add cost advantage. Eleven touchpoints per subscription and 50.41% repeat rate create stickiness. Yet the edge needs constant capex and execution. It does not protect against low occupancy in new cities, rising refurbishment cost or credit losses. No pricing power is proven.

9. Risks

Liquidity and funding. The group flags current liabilities above current assets by ₹911.73 million. Other current assets at ₹228.66 million exceed narrow NWC. Debt is ₹1,875.90 million. The model needs continuous debt and equity. If funding tightens, growth stalls. This is idiosyncratic.

Credit and collections. One-third of receivables are impaired. ₹108.92 million is over 3 years overdue. Allowance already exceeds the impaired pool. Further provisioning would cut profit. This has worsened as the book grew.

Regulatory and governance. Past FEMA lapses drew compounding fees of ₹26,530, ₹405,709 and ₹32,979. GST contingent claims are ₹24.49 million. CARO notes late statutory dues. Litigation includes a company petition and an FIR against the promoter. Promoter stake below 20% weakens alignment.

10. Verdict

Load-bearing facts: clean PAT is only about two-thirds of reported due to the tax credit; free cash flow has been negative every year with an ₹829.86 million cumulative gap funded by debt; one-third of receivables are impaired with old overdues; liquidity is stretched with liabilities above assets and debt near ₹1,875.90 million; growth and occupancy are genuinely strong. Therefore the business leads its niche and grows fast, but earnings quality and cash conversion are weak. At about 40x reported and about 60x clean post-issue earnings, the band demands perfection. Thesis needs occupancy near 83%, rising items per user and shrinking FCF deficit without fresh debt. It breaks if impaired receivables force higher provisions, occupancy falls in new cities, or capex keeps FCF negative.

11. IPO Snapshot