The public offering will largely be to give its investors an exit, he said, adding that there is no pressure for the company to raise funds through private equity or an initial public offering (IPO) in the near term as it is well-capitalized for its future expansion plans.
“We will start the preparation soon for a listing in 18-24 months. It’s always a good idea to be IPO-ready and then go to the market when the timing is right,” Balakrishnan told Mint in an interview.
If all goes as planned, Duroflex will likely be the second company in the space after its larger rival Sheela Foam—maker of Sleepwell and Kurlon mattresses—went public in 2016. Duroflex also competes with other players such as Wakefit, The Sleep Company and SleepyCat.
In 2023, Sheela Foam acquired a 94.6% stake in Kurlon Enterprise Ltd (KEL) at an equity valuation of ₹2,150 crore, and a 35% share in furniture rental startup Furlenco for a cash consideration of ₹300 crore. Year-to-date, the company’s shares have lost more than a quarter, closing at ₹708 apiece on the National Stock Exchange on Thursday.
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Duroflex last raised $60 million in 2021 from investment firm Norwest Venture Partners for its house of brands—Duroflex and Sleepyhead—at a valuation of $312 million, according to data from market intelligence provider Tracxn. Prior to this, it had raised growth capital of $22 million from Lighthouse Funds in 2018. The company is largely a promoter-led entity, with private equity funds holding a 33.4% stake.
Balakrishnan explained that the company is currently adequately capitalized for growth, expansion, investing behind talent as well as increasing retail footprint. Over the past two financial years, Duroflex has been laser-focused on profitability to ensure that its expansion and growth plans can come from internal accruals.
In fiscal year 2024 (FY24), the company reported a consolidated operating income of ₹1,095 crore, compared to ₹1,057 crore in FY23. It posted a profit of ₹11.2 crore, from a loss of ₹15.47 crore in FY23. The company has clocked profits in FY25 as well but did not disclose the figures.
“We have seen a significant shift in the last year in terms of profitability. It has largely been a function of making sharp choices in the segments, channel, and product types. We have reassessed our priorities and our focus and non-focus areas,” he said. “While we continue to invest in marketing, we have also taken a closer look at our overall cost structures and have tried to eliminate or reduce those that have been non-value-adding to the business.”
In 2017, Duroflex launched another vehicle within the group—Sleepyhead, which caters to the growing demand for mattresses online, especially among first-time consumers. The vertical is focused on the younger, digitally native millennials and Gen Z who are now coming into the workforce.
“We strongly believe that the two-brand play is needed to address different consumer cohorts, basis age, profiles, psychographics and attitude. From this standpoint, both brands have different prime prospects and therefore total addressable market (TAM),” Balakrishnan said.
Nearly seven years later, Sleepyhead decided to ditch its direct-to-consumer-only strategy with the opening of three new stores in Bengaluru. It expects to open three-four more stores in the coming months. After the company establishes significant presence in Karnataka’s capital city, it will also evaluate other metro cities to open similar stores, Balakrishnan said.
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Sleephead’s products, prices, and experiences are different from that of Duroflex, but the entire backend for both the divisions is synergized to enable higher cost savings. Currently, it contributes about 10-15% to the overall revenue for the Duroflex Group.
Devangshu Dutta, chief executive at consultancy firm Third Eyesight, also emphasized that older companies need to update their offering, branding and communication for the younger, digital-friendly generations.
“The newer competitors are yet to penetrate cities where older incumbents already have a presence—this offers the older companies at least some chance to refresh their business and retain the territory,” he said. Dutta added that they need to reach out to the different segments with a varied product mix as well as through different channels.
While there is growing competition in the space, he believes the market opportunity is also expanding simultaneously, as more and more youth are forming new households, often in cities away from their parental home, as they move into their careers.
This is creating an expanding opportunity for furniture, home décor, home utility and furnishings companies. “Short-term economic cycles may cause consumers to tighten their wallets and postpone their purchases, but the broad trend is that of growth,” Dutta added.
However, Sleepyhead is a slightly late entrant to offline expansion as many of its peers like Wakefit and The Sleep Company already have over 100 stores. “We have been very careful about expanding in retail. In the case of a wrong location or a wrong business model, it can be a drain on the profitability, so we have taken time to patiently assess and then go about this strategy,” Balakrishnan said.
He added that most companies are a little prudent about growing their footprint after the initial phase of expansion, as the operating costs of running a store are significant.
Balakrishnan also highlighted similar expansion plans for Duroflex, which derives the bulk of its revenue from mattresses and foam, followed by furniture and other accessories. “While we have gone a little slower on expansion this year to focus on profitability, we plan to drastically increase our footprint and double down on those geographies which are of strategic importance to us over the next 9-12 months.”
Although it’s a pan-India brand, the company gets about 65% of its revenue from the southern part of the country, which is the single-largest zone for the entire comfort solutions category.
Its strong brand positioning with plans for geographical expansion, growing scale of operations and comfortable risk profile will keep Duroflex in good stead for future growth, Care Edge Ratings said in a report in November.
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Founded in 1963 by the late P.C. Mathew and George L. Mathew, the company has a vast distribution network with over 2,000 dealers nationwide for its mattresses, furniture and accessories segment, and about 190 dealers and 100 distributors across the country for its foam products.
