Wakefit posts Rs 971 Cr revenue in 9M FY25; auditor raises concern over past financials

Wakefit, a brand specializing in home and sleep solutions, has submitted its Draft Red Herring Prospectus (DRHP) to the Securities and Exchange Board of India (SEBI) for an Initial Public Offering (IPO).

According to the balance, Wakefit reported a revenue of Rs 971 crore for the first nine-month period of FY25, concluding on December 31, 2024. Auditors, however, raised concerns regarding the financial statements.

Wakefit’s operating revenue stood at Rs 971 crore in the nine months of FY25, nearly matching the Rs 986 crore it recorded in the entire FY24. The firm’s topline was largely driven by the sale of manufactured goods, which accounted for over 97% of its operating income, standing at Rs 951 crore. Other revenue came from the sale of traded goods and other income, which pushed its total income to Rs 994 crore in the nine months of FY25.

On the expense side, cost of materials was the major contributing factor, accounting for 43% of the total expense at Rs 433 crore. Employee benefits accounted for Rs 126 crore, and the firm also spent Rs 82 crore on advertising and Rs 75 crore on delivery-related expenses during the period. Other overheads, including depreciation and IT expenses, further added to the cost base. Overall, total expenses stood at Rs 1,003 crore in the nine months of FY25, as compared to Rs 1,032 crore in FY24.

Wakefit reported a loss of Rs 9 crore in the nine months of FY25, as compared to a loss of Rs 15 crore in FY24. However, the company posted a positive EBITDA of Rs 76 crore, with an EBITDA margin of 7.65% in the same period. Its ROCE stood at 1.33%.

On a unit level, the company spent Rs 1.03 to earn a rupee of revenue during the 9-month period and has current assets worth Rs 577 crore, including Rs 19 crore in cash and bank balances.

Looking further in the DRHP, the auditors flagged issues such as mismatches between financial records and bank filings, delayed statutory payments including GST dues under dispute, absence of an internal audit system, and cash losses over the last three fiscals. In FY24, the company’s accounting software was also found lacking the mandatory audit trail feature. 

While these observations didn’t require changes to its reported financials, Wakefit cautioned that similar remarks in the future could impact its reputation and financial standing.

The company also revealed it uses several non-GAAP financial metrics like EBITDA, adjusted EBITDA, and return on capital employed to track performance. Wakefit noted these figures may not follow standard industry definitions and might not be comparable with those reported by peers. It urged investors not to rely solely on these supplemental measures and to consider audited financials under statutory accounting norms.