RentoMojo Made ₹116 Cr in Operating Cash. Spent ₹111 Cr Buying Things to Rent.

The 30-Second Summary

RentoMojo made ₹43 Cr in profit on ₹266 Cr in revenue.

It also generated ₹116 Cr in operating cash and spent ₹111 Cr buying things to rent.

The reported profit is real. The cash from those profits isn't free. It funded the next year's rental fleet.

This is not a typical asset-light marketplace. It is a leasing business that calls itself a marketplace. The model works, but it works the way a leasing business works: capital in, depreciation out, cash recycled.

The OCF-Capex Symmetry

The numbers that tell the story sit next to each other in the cash flow statement.

Operating cash flow: +₹115.54 Cr. The rental fees collected from customers, net of operating expenses and working capital, produced ₹116 Cr of cash.

Investing cash flow: -₹111.32 Cr. Primarily capex on rental assets: furniture, appliances, electronics added to the fleet.

Net of the two: +₹4.22 Cr. The cash that the operations actually generated, free of fleet reinvestment, was approximately ₹4 Cr.

This is the structural shape of the rental subscription model. To grow revenue, RentoMojo needs more rental assets. To get more rental assets, it needs to spend cash. To get the cash, it operates the existing fleet at scale. The cycle is self-sustaining as long as new fleet additions earn back their cost faster than they depreciate, but it does not produce free cash flow at scale until the fleet stops growing.

The financing cash flow (-₹34.68 Cr) covers borrowings repayment, finance costs, and other financing items. With operating + investing nearly balanced and financing slightly negative, the cash balance fell ₹30 Cr to ₹11 Cr.

Why Depreciation Will Keep Growing

Depreciation expense was ₹48.82 Cr in FY2025, up from ₹30.13 Cr. The 62% increase outpaced revenue growth (38%) and profit growth (92%).

This is mechanical. Property, plant and equipment grew from ₹182 Cr to ₹325 Cr. That is the rental asset base. Each piece of furniture, each washing machine, each set of fitness equipment depreciates over its useful life (typically 3-7 years). A larger fleet means a larger annual depreciation bill.

The forward implication: as long as RentoMojo continues to grow the rental fleet, depreciation will continue to expand. PAT will be a function of rental revenue (which scales with fleet size) minus depreciation (which also scales with fleet size). The margin between the two is the unit economics. As long as that margin holds positive, PAT grows; if rental yields compress or fleet utilisation drops, PAT compresses.

The current FY2025 numbers say the margin is positive: revenue grew 38%, depreciation grew 62%, but other operating costs grew slower, and the net effect was PAT doubling.

The Profit Looks Real Because No Tax Is Being Paid

PAT (₹43.12 Cr) equals PBT (₹43.12 Cr). There is no current tax or deferred tax expense in FY2025.

This is consistent with a company utilising historical carried-forward losses against current-year profits. RentoMojo has been operating since 2014 and was loss-making for several of those years. The accumulated losses provide a tax shield against current profits.

Once the carried-forward losses are exhausted, RentoMojo will start paying corporate tax at the standard 25.17% rate. Applied to PBT of ₹43 Cr, that is a future tax bill of ~₹11 Cr per year at current scale. The tax shield is finite, and the company appears not to be far from exhausting it given the FY2025 profit scale.

The deferred tax line being zero is interesting. A deferred tax asset (DTA) is the accounting recognition that historical losses can offset future profits. Companies recognise DTA when they are confident future profits will arrive; until then, they don't recognise it. RentoMojo running zero deferred tax suggests the company is being conservative about DTA recognition, despite the consecutive profitable years.

The Capital Structure

Total borrowings were ₹154.58 Cr at March 2025. Net worth was ₹183.62 Cr. Debt-equity ratio: approximately 0.84.

For a capital-intensive rental business, this is a measured leverage ratio. The asset base of ₹325 Cr (PPE) is funded by:

• Net worth: ₹184 Cr
• Borrowings: ₹155 Cr
• Working capital and other liabilities: balance

The borrowings have stayed broadly flat over the year (₹147 Cr to ₹155 Cr, a ₹7 Cr increase). The fleet expansion of ₹143 Cr was funded primarily by operating cash flow plus modest equity additions, not by significant new debt.

This is the prudent way to grow a rental business. Debt scales with the asset base but not faster than internal cash generation can service it. Finance costs of ₹26.52 Cr are 9.97% of revenue, manageable but a real drag on margins.

What FY2026 Has to Show

The FY2025 results clarify the questions, not the answers.

Whether the rental yield holds. RentoMojo's economics depend on the average annual rental income per asset divided by the asset's depreciated book value. If competitive intensity (or used-furniture marketplace pricing) compresses rental yields, the margin between revenue per asset and depreciation per asset narrows.

Whether the fleet utilisation improves. The audit doesn't disclose utilisation rates, but a well-run rental fleet runs at 80-95% utilisation across categories. Underutilised assets continue to depreciate without earning rental income, dragging on margins.

Whether free cash flow eventually decouples from fleet growth. Today, every rupee of operating cash is reinvested in the next year's fleet. At some scale, the rental base becomes mature enough that the renewal capex (replacing depreciated assets) is materially less than the operating cash flow. That is when free cash flow starts compounding rather than recycling. RentoMojo is not at that point yet.

The trajectory is real. The FY2025 numbers say the model works at this scale. The question is what scale, and what unit economics, the model ultimately settles into.