Rentomojo flags supplier dependence, city concentration among key IPO risks

New Delhi: Furniture and appliance rental platform Rentomojo has flagged dependence on third-party suppliers, concentration of revenue in major cities and subscriber payment defaults among key risks to its business in its draft red herring prospectus (RHP) for its Rs 1,255.57-crore initial public offering.

The company said disruptions in vendor supplies, higher procurement costs or quality issues could affect inventory availability, customer experience and margins. Its top five asset suppliers accounted for 12.18 per cent of total capital and operational expenses in FY26, according to the RHP.

“If we are unable to procure products from our vendors on commercially acceptable terms or if our third-party manufacturers choose not to manufacture products for us or fail to maintain quality standards or if our margins are impacted by higher supply costs or raw material price increases or delay in supply of the products, our business and reputation may be adversely affected,” the company said in the RHP.

Rentomojo also cautioned that growth depends on attracting and retaining subscribers, with higher customer churn or acquisition costs likely to hurt profitability.

Moreover, revenue concentration remains another key risk with the top 10 cities contributing 89.51 per cent of FY26 revenue.

The company said adverse economic, regulatory or competitive developments in these markets could disproportionately impact performance.

Subscriber payment delays, defaults and early contract cancellations could reduce returns on rented assets and increase collection costs, while expansion into new cities may face execution challenges related to warehousing, logistics and customer acquisition, the company said.

Apart from that, Rentomojo said its promoter and certain directors are involved in ongoing legal and regulatory proceedings and any adverse outcome could affect its business, financial condition and reputation.

The Rs 1,255.57-crore public issue -- which opened for subscription on Wednesday and will be concluded on Friday -- comprises a fresh issue of Rs 150 crore and an offer for sale of Rs 1,105.57 crore.

The company has fixed the price band between Rs 384 and Rs 404 per share.

ABOUT THE AUTHOR

IANS

[email protected]