New Delhi, September 9 (Daily Kiran) : Rentomojo, a company specializing in furniture and home appliance rentals, has outlined several significant business risks in its draft red herring prospectus (RHP) ahead of its ₹1,255.57 crore initial public offering (IPO). The firm noted that reliance on third-party suppliers, heavy revenue generation from a few select cities, and potential customer payment defaults could impact its growth and profitability.
A substantial portion of Rentomojo’s operations depends on external vendors and manufacturers. Disruptions in supply, product quality issues, rising raw material costs, or delays in delivery could negatively affect inventory availability, customer experience, and profit margins.
According to the RHP, the top five asset suppliers contributed 12.18% to the company’s total capital and operational expenses in the fiscal year 2025-26.
The company stated that failing to purchase products under commercially acceptable terms, or if third-party manufacturers cease production or fail to maintain quality standards, could adversely affect both its business and reputation.
Rentomojo also emphasized that its future growth hinges on its ability to attract new customers and retain existing ones. An increase in customer churn rates or higher acquisition costs for new clients could pressure profitability.
In terms of revenue, the company highlighted a significant risk, noting that 89.51% of its total income for the fiscal year 2025-26 is expected to come from just ten major cities. Adverse economic, regulatory, or competitive conditions in these areas could disproportionately affect its business.
Additionally, Rentomojo pointed out risks related to delayed payments from customers, defaults on installments, and early contract terminations. Such issues could reduce returns on rented products and increase the costs of recovering outstanding payments.
Expanding into new cities also presents challenges. The company indicated that difficulties in developing warehousing and logistics networks, along with attracting new customers, could hinder its expansion plans.
The RHP also mentioned that the company’s promoters and some directors are currently facing legal and regulatory issues. If these matters yield unfavorable outcomes, they could impact the company’s financial health, operations, and reputation.
Notably, Rentomojo’s IPO opened to investors on Wednesday and will close on Friday. The offering includes the issuance of ₹150 crore in new shares, along with an offer for sale (OFS) of ₹1,105.57 crore. The company has set a price band of ₹384 to ₹404 per share for the IPO.
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