Rentomojo shares jump 9% after listing at 19% premium over IPO price. Can the debut-day mojo last?

Shares of Rentomojo surged 9% on Thursday, taking their debut-day gains to 30% above the IPO price. The stock had listed earlier in the day at a 19% premium to its issue price.

Rentomojo shares opened at Rs 482.45 apiece on the NSE, marking a premium of more than 19% over the IPO price of Rs 404 apiece. In less than an hour of its debut, the stock rallied sharply by over 9% to trade at Rs 526.70 apiece, adding more than Rs 460 crore to the company’s market capitalisation and taking it to nearly Rs 5,484 crore.

Also read | Rentomojo shares list at 19% premium over IPO price

About Rentomojo IPO

The strong market debut comes after Rentomojo’s Rs 1,255.57 crore IPO saw strong investor interest during its three days of public bidding, being subscribed 73 times its offer size between September 9 and September 11.

Qualified institutional buyers (QIBs) led the demand, subscribing their reserved portion over 177 times. The portions kept for retail investors and non-institutional investors (NII) meanwhile, were booked around 16 times and 68 times, respectively.

The maiden public issue of the furniture and appliances renting platform comprised a fresh issue of shares worth Rs 150 crore, and an offer for sale of shares worth around Rs 1,106 crore by existing shareholders. A day before the IPO opened for public subscription, the company raised Rs 376 crore from 41 anchor investors.

Also read | Rentomojo to raise Rs 1,256 crore via IPO; rich valuation a concern

How will Rentomojo use its IPO proceeds?

Rentomojo aims to use the fresh issue proceeds from the IPO for several key corporate purposes. A portion of the funds will go towards the repayment or prepayment, either in full or in part, of certain outstanding borrowings, along with the accrued interest on these loans.

The company also plans to use part of the IPO proceeds to pay lease rentals and licence fees for its warehouses and experience stores. The remaining IPO proceeds will be utilised for general corporate purposes.

Read more:NSE IPO Tracker: Catch all the highlights here

Should you buy, sell or hold Rentomojo shares?

Sunny Agrawal, Deputy Vice President of Fundamental Research at SBI Securities, believes investors should continue to hold Rentomojo shares from a medium- to long-term perspective, given its position as an organised furniture and appliance rental platform in India, supported by a recurring subscription model and a growing subscriber base.

“The company has delivered fabulous growth during the last two years, and we believe going forward… Rentomojo is a play on urban mobility,” he added.

Rentomojo’s 19% listing pop has already priced in much of the near-term optimism, and at around 41x FY26 P/E, the valuation cushion remains thin, cautioned Shivani Nyati, Head of Wealth at Swastika Investmart. Debt reduction from IPO proceeds is a positive structural driver, but until profitability and asset-utilization metrics show sustained improvement, the stock is better suited to a wait-and-watch approach rather than fresh accumulation at current levels, according to the analyst, who suggested a stop loss at Rs 430 apiece, below listing price, to protect against the reversal of listing day gains.

Disclaimer: This article has been written by Debaroti Adhikary, who is not a SEBI-registered Research Analyst or an Investment Adviser. Debaroti Adhikary and his/her ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.