Awfis Space Solutions IPO Review

Awfis Space Solutions Limited is a workspace solution provider and offers a wide range of flexible workspace solutions, catering to the needs of individuals, start-ups, SMEs, and large corporations. Awfis Space Solutions IPO is set to raise Rs 598.93 crores. The issue is a combination of fresh issue of 0.33 crore shares aggregating to Rs 128.00 crores and offer for sale of 1.23 crore shares aggregating to Rs 470.93 crores.

IPO opensMay 22, 2024
IPO ClosesMay 27, 2024
IPO Size (Rs.)₹ 598.93 cr. (15,637,736 shares)
Breakupfresh issue ₹128.00 Cr+ OFS 470.93 cr
Face Value:₹ 10 per share
IPO Price in Rs :₹364 to ₹383 per share
Minimum Lot39 Shares
Listing AtNSE, BSE
NII Quota~15%
Retail Quota~10%
 Lead ManagerICICI Securities, IIFL Securities, Emkay Global Financial Services
RegistrarBig Share

About Awfis Space Solutions:

  • The Company was incorporated as ‘Awfis Space Solutions Pvt. Ltd’ on December 17, 2014.
  • Awfis is the largest flexible workspace solutions company in the country as on December 31, 2023, based on total number of centers and ranked 1st among the top 5 benchmarked players in the flexible workspace segment with presence in 16 cities in India.
  • Awfis has 2,295+ clients.
  • In addition to offering core co-working solutions the company also has Awfis Transform (construction and fit-out services business segment) and Awfis Care (facility management services business segment).
  • Awfis has 169 total centers across 16 total cities in India, with 105,258 total seats and total chargeable area of 5.33 million sq. ft., of which 31 centers and 25,312 seats are under fit-out with chargeable area aggregating to 1.23 million sq. ft.
  • The company’s flexible workspace solutions cater to varied seat cohorts ranging from a single seat to multiple seats, which can be contracted by the clients for a period ranging from as short period as one hour to several years.
  • It is promoted by Amit Ramani and Peak XV Partners Investments V.

Financials: Awfis Space Solutions IPO

Particulars/ Rs (in crore)2023(09)2023(12)2022(12)2021(12)
Revenue from contract with customers616.5545.28257.05178.36
Restated loss-18.94-46.63-57.16-42.64
Equity Share capital19.1530.1330.1330.13
Net Worth247.19169.3694.721150.75
EPS / (Loss) Basic & Diluted (₹)-3.05-8.11-10.68-8.38
NAV per share (₹)123.8656.231.4350.03
Total Borrowings23.7210.9312.112.97
Operational seats79,94668,20346,15230,253
Total number of Clients2,2951,9671,5251,020
Operational chargeable area (mn sq. ft)
Post issue Share Capital69.40
IPO price383.0
Market cap in Lacs2,658.0
Market cap / Sales4.87

Awfis Space Solutions IPO: Anchors

  • Awfis Space Solutions garnered Rs 268 cr from anchor investors.
  • Those who participated include — Goldman Sachs, EastBridge Capital Master Fund, HDFC Mutual Fund (MF), ICICI Prudential MF, Axis MF, UTI MF, Aditya Birla Sun Life Insurance Company and SBI General Insurance Company.
  • The company has allotted 70.13 lakh equity shares to 32 funds at Rs 383 a share.

Awfis Space Solutions IPO: Salient Points

  • The growth of flexible workspaces is driven by factors such as enterprise focus on flexibility, cost optimization, workforce fluidity and reverse migration, focus on facilities, and amenities, as well as growth of start-ups..
  • The total addressable market for flexible workspaces is projected to reach ₹474-592 billion by FY26, growing at a CAGR of 18-19% in Tier 1 cities
  • Peak XV Partners Investments V holds a 22.86 per cent stake in Awfis, while Bisque and Link Investment Trust own 23.47 per cent and 0.36 % stake in the company.
  • Promoter Peak XV Partners Investments V (formerly known as SCI Investments) as well as shareholders Bisque Ltd and Link Investment Trust will offload shares through the OFS.
  • Due to losses retail portion in Awfis Space Solutions IPO is 10% only.
  • From the Rs. 128 cr fresh issue proceeds, Rs. 42 cr will go for capex and Rs. 54 cr will go for working capital.
  • Table sets forth the total number of operational seats, client base and operational chargeable area as of the dates indicated
 As of
March 31, 2021March 31, 2022March 31, 2023December 31, 2023
Operational seats30,25346,15268,20379,946
Total  number of clients1,0201,5251,9672,295
Operational chargeable area (in million sq. ft.)1.462.213.504.10
  • Breakdown of clients by their industries based on occupancy rates, as of the dates indicated:
IndustryMarch 31, 2021March 31, 2022March 31, 2023December 31, 2023
Information Technology52.39%44.23%46.47%46.26%
Professional services6.48%7.55%12.16%11.79%
Consumer services, durables and retailing10.64%14.42%10.26%11.60%
Health care services and pharmaceuticals7.68%5.97%8.45%8.07%
Financial services and capital markets9.56%6.23%5.69%8.01%
Construction and engineering machinery and supplies7.30%9.43%7.83%6.56%
Real estate1.50%2.27%1.67%1.78%
Food and beverage, personal and household products0.66%4.91%3.40%1.65%
Telecommunication services2.02%1.42%1.42%1.45%
Chemicals,    construction    and                      packaging materials0.66%2.38%1.66%1.29%
Energy and utilities0.75%1.00%0.90%1.21%
  • Their client base spans various industries including technology, financial services, and healthcare. Some major clients include Capgemini, Lenovo, Fujitsu
  • One third of the occupied seats in 9MFY24 were from multi-center clients, with their number increasing by 228.36% since FY21.
  • Clients with service agreement for a tenure of less than 12 months, 12-23 months, and 24 months and more accounted for 29.38%, 41.77% and 28.85% of the total occupied seats, respectively. Rest of the clients have short-term client service agreements.
  • About 67.82% of the company’s rental income from co-working spaces was derived from centers located in Bangalore, Mumbai, Pune, and Hyderabad as of end of December 2023..
  • The company has differentiated models for sourcing and procuring workspace i.e. SL (Straight Lease) Model and the MA (Managed Aggregation) Model. Awfis has increased its focus on the lower-risk, asset light MA model and as of December 31, 2023 with 66.43% of its centers are under the MA model, based on total seats.
  • Awfis is the largest flexible workspace solutions company in India as on December 31, 2023, based on total number of centers and ranked 1st among the top 5 benchmarked players in the flexible workspace segment with presence in 16 cities in India.
  • Business has grown rapidly, including the revenue from contract with customers that has grown at a CAGR of 74.85% from ₹1,783.60 million in Fiscal 2021 to ₹5,452.82 million in Fiscal 2023
  • The company’s capital expenditure per seat at ~ ₹ 50,000 is lower than other top operators in India.
  • The total borrowings were ₹ 10.92 Cr in FY 2023.
  • The ROCE was 25.26% in FY 2023. and increased by 4.59 times from FY 2021 to 9 months ended December 31, 2023.indicating healthy operations.
  • It have increased focus on the asset-light managed aggregation model over the year. Managed Aggregation (MA) models, is now accounting for 66% of total seats. MA model entails lower-risk and lower capex, making operations asset-light.
  • Awfis Space Solutions IPO is in loss but its business is cash flow positive with Rs. 195 cr cash from operations for the period 9MFY24.
  • EBITDA less actual lease payment stood at Rs. 67 cr in 9MFY24, up from FY23’s Rs 36 cr
  • No direct listed peers. REITs which are engaged in leasing commercial properties cannot be compared but are ruling at PE multiples of 30-35x.
  • My assessment of Awfis Space Solutions IPO
    • Apply : I intend to apply.
    • Perceived Risk: Moderate
    • Listing Gains : Low to moderate
    • Short to Medium Term View: Neutral to slightly positive.
    • How it stacks with Peers: No peers. Only listed SME of much smaller size has not done well. REITs engaged in commercial property leasing have fared reasonably.
    • Industry prospects : Fair.
    • Remarks: Company is loss making as per accounting standards. Otherwise business is cash flow positive. Company operates on 30% EBITDA margin. It has an efficient capital expenditure of ₹50,000 per seat, much lower than the industry average,
    • These views are my personal opinion based on my limited understanding of the company & its business. Use them only as an input for further research on the company.
  • GMP as reported on social media has been Rs. 125 (~ 33%)
  • Please take a decision based on your risk appetite and your own assessment.
  • Standard disclaimer: I am not a SEBI registered analyst and above analysis is for educational purpose only. Iam a postgraduate in engineering & Management . I have in the past cleared some exams like NISM-Series-V-A: Mutual Fund Distributors Certification, NISM-Series-X-A: Investment Adviser (Level 1) Certification and NISM-Series-X-B: Investment Adviser (Level 2) Examination. This post is my view on the subject matter and is only academic and exploratory in nature. It is not meant to influence investment decisions of investors. I may have bias/vested interest in covered Stock/Mutual Funds/NCD etc. due to my own investment or leaning. Further my understanding of the areas on which I write may be imperfect or incomplete and data could be wrong due to limited time and resources at my disposal. Do check the data from company’s RHP and exchanges before making any decision. Please do your own due diligence as stock market/MF investments have high degree of inherent risk.

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