With Low Investors' Interest and ‘Avoid’ Calls, Is Wakefit IPO a Safe Pick?

D2C mattress company Wakefit Innovations Limited on Monday opened its ₹1,288.89 crore IPO (initial public offering) for public subscription. Till 11.30 am, the public issue was subscribed nearly 7% on the first day of bidding. It received bids approximately 27 lakh bids against the total offer size of 3.63 crore shares.

Of these, retail participation stood at about 35% of the total reserved portion for them, while NIIs had taken up roughly 3% of their allotted portion. Meanwhile, QIBs (qualified institutional buyers) did not participate in the public issue yet, despite having 1.98 crore shares reserved for them.

The IPO opened for subscription on December 8 and will conclude on December 10. The company will make its stock market debut on December 15. The company has fixed a price band of ₹185-195 per share for its maiden offering, valuing the Bengaluru-based firm at nearly ₹6,400 crore.

The public issue comprises a fresh issue of equity shares worth up to ₹377.18 crore and an offer-for-sale (OFS) of 4,67,54,405 shares, valued at around ₹912 crore, taking the total issue size to ₹1,289 crore.

As part of the OFS, promoters Ankit Garg and Chaitanya Ramalingegowda, along with other selling shareholders, including Nitika Goel, Peak XV Partners Investments VI, Redwood Trust, Verlinvest SA, SAI Global India Fund I LLP, and Paramark KB Fund I, will offload shares.

After the stake sale, the promoters’ holding will come down to around 37% from the current 43.70%. The company has planned to use the proceeds from the fresh issue worth ₹31 crore, for setting up of 117 new COCO-Regular stores, ₹15.4 crore towards purchase of new equipment and machinery; ₹161.4 crore for expenditure for lease and sub-lease rent and license fee payments for existing stores. Additionally, ₹108.4 crore will be used towards marketing and advertisement expenses.

Before listing, the unlisted shares of Wakefit were trading with 18.46% grey market premium (GMP) over the IPO price, according to data on Investorgain and IPO Watch. The company reported revenue from operations of ₹724 crore and profit of ₹35.5 crore for the six-month period ended September 30, 2025.

Brokerages have started sharing their views, and a majority have leaned toward an avoid recommendation, pointing to stretched valuations and uncertainties around demand and margins.

Should Investors Bet on Wakefit IPO?

While a majority of analysts have assigned an ‘avoid’ rating citing expensive pricing and execution risks in a largely unorganised market, a few brokerages remain optimistic about Wakefit’s long-term potential, highlighting its scale, vertically integrated model, and margin expansion trajectory.

Wakefit is present in the domestic home and furnishing industry, which is largely dominated by unorganised players with 70% market share, said ICICIDirect Research in its recent report, while giving "avoid" recommendation to the IPO.

"We do not expect its investment plans to expand D2C presence through new store additions and marketing investments to immediately provide a clear edge in competing with unorganised players," it said.

The public issue appears to be expensive to SBI Securities on comparing with its listed peer. "The issue is valued at EV/Sales multiple of 4.7 times based on the post-issue capital....we recommend investors to 'avoid' the issue and track the company’s performance post listing".

The company had initially started its business with selling mattresses and then expanded into adjacent categories of furniture and furnishings. Over the last three years, WIL has delivered a revenue CAGR of 25% while simultaneously turning EBITDA positive in FY24 and PAT positive in 1HFY26 respectively.

On the other hand, BP Equities recommended investors to "subscribe for long term" in Wakefit IPO. Given its expansion plans, expanding margins, scalable business model, and industry growth potential, the analyst believes the valuation is justified.

Similarly, SMIFS also gave "subcribe" recommendation to the issue, given Wakefit's profitability inflection, 25% revenue CAGR outpacing organised peers, vertically integrated cost advantages, and sustainable competitive moats offering multifold revenue potential.

"... value creation in India's fastest-growing home furnishings retail sector, a high-risk, high-potential opportunity for long term investors," it added.