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IPO Details

• IPO Opening Date: July 10, 2025.
• IPO Closing Date: July 14, 2025.
• Total Issue Size: The IPO is a combination issue worth ₹582.56 crores.
  • Fresh Issue: This component aggregates up to ₹445.00 crores (approximately 10,933,660 equity shares at the upper cap).
  • Offer for Sale (OFS): This portion consists of 3,379,740 equity shares, aggregating up to ₹137.56 crores at the upper cap.
• Price Band: ₹387 to ₹407 per equity share, with a face value of ₹10 each.
• Lot Size: The minimum application size is 36 shares.
• Allocation Percentages for Investors:
  • Qualified Institutional Buyers (QIBs): Not more than 50% of the net offer.
  • Non-Institutional Bidders (NIIs): Not less than 15%.
  • Retail Individual Investors (RIIs): Not less than 35%.
  • Employees: Equity shares worth ₹3.75 crores
• Lead Managers: JM Financial Ltd., BOB Capital Markets Ltd., IIFL Capital Services Ltd., and Kotak Mahindra Capital Co. Ltd..
• Registrar: MUFG Intime India Pvt. Ltd. (Link Intime) is the registrar to the issue.

About the Company

• Foundation: Smartworks Coworking Spaces Ltd. (SCSL) was incorporated on December 17, 2015, initially as “Smart Work Business Centre Private Limited” in Kolkata.
• Core Business: SCSL operates as an office experience and managed campus platform, aiming to enhance productivity for enterprises and their employees in India. They provide fully serviced, tech-enabled office environments with aesthetic designs and essential amenities.
• Service Offerings: Beyond workspaces, they offer access to various enhanced services and amenities, including cafeterias, gyms, crèches, and medical centers. They also provide Fit-out-as-a-Service (FaaS).
• Operational Scale (as of March 31, 2025):
  • SCSL is recognized as the largest managed campus operator among benchmarked operators, with a lease-signed portfolio of 8.0 million square feet as of March 31, 2024 (CBRE Report). Their total Super Built-Up Area (SBA) managed reached 8.99 million square feet.
  • The company operates 50 Centres across 15 cities in India, including major hubs like Bengaluru, Pune, Hyderabad, Gurugram, Mumbai, Noida, and Chennai.
  • They had a total of 203,118 Capacity Seats.
  • As of March 31, 2025, they served 738 Clients occupying 152,619 Seats. By June 30, 2025, they had 728 Clients with 169,541 Seats, with 12,044 seats yet to be occupied. Their clientele primarily consists of mid-to-large enterprises, including Indian corporates, MNCs, and startups.
• International Presence: SCSL has expanded its operations to Singapore, with two centres totalling 35,036 square feet, serving 83 clients as of June 30, 2025.
• Largest Facility: Their largest centre is located in Vaishnavi Tech Park in Sarjapur, Bengaluru, spanning approximately 0.7 million square feet.
• Employee Base: As of March 31, 2025, the company had 794 permanent employees.
• Promoters: The promoters of Smartworks Coworking Spaces Ltd. are Neetish Sarda, Harsh Binani, Saumya Binani, NS Niketan LLP, SNS Infrarealty LLP, and Aryadeep Realestates Private Limited.

Financials

The company’s financial performance (on a consolidated restated basis) for the last three fiscals is summarized below:

The company has demonstrated consistent growth in its revenue (top line) over the past three fiscal years. However, it has reported net losses during these periods. Despite these net losses, SCSL has maintained positive cash EBITDA growth.

• Post IPO Market Cap: ₹4,644.82 crores.
• Market Cap/Sales (FY25): 3.38 times
• P/E FY24: Negative
• P/E FY25: Negative

Anchor Issue:

Smartworks Coworking Spaces Limited raised a total of ₹173.64 crore from 13 anchor investors ahead of its IPO.

The top 10 anchor investors with their percentage allocation are: Tata Mutual Fund – Tata Small Cap Fund (11.89%), Axis New Opportunities AIF – Series II (11.89%), Aditya Birla Sun Life Insurance Company Limited (11.89%), Baroda BNP Paribas Large & Mid Cap Fund (11.89%), Buoyant Opportunities Strategy-II (10.89%), Sageone-Flagship Growth OE Fund (10.89%), SBI General Insurance Company Limited (10.89%), Trust Mutual Fund – Trust MF Flexi Cap Fund (4.13%), Trust Mutual Fund – Trust MF Small Cap Fund (4.12%), and Societe Generale – ODI (2.88%).

The remaining anchor investors include BNP Paribas Financial Markets – ODI, Shine Star Build Cap Pvt Ltd, and Coeus Global Opportunities Fund, each with allocations of 2.88% or less.

Total allocation to domestic mutual funds was 32.04% of the anchor investor portion

Salient Points

• Use of Funds: The net proceeds from the fresh issue, ₹114.00 crores is earmarked for the repayment/prepayment/redemption of certain borrowings, which is expected to reduce finance costs and enhance net margins. An additional ₹225.84 crores will be allocated as capital expenditure for fit-outs in new centres and security deposits. The remaining funds are designated for general corporate purposes.
• Business Scenario & Trends: The flexible workspace stock in Tier 1 cities experienced a robust CAGR of 23-24% between 2020 and 2024, reaching over 82 million square feet by the end of 2024. SCSL has outpaced this industry growth, with its Super Built-Up Area (SBA) growing at a CAGR of 38.37% in the same period, indicating strong market penetration. There’s a notable shift in demand towards larger office spaces, with many MNCs expanding into India, presenting a significant opportunity for SCSL. India’s office market is concentrated in its top 9 cities, accounting for 90-95% of the total commercial office stock in Q1 CY2025.
• Business Operations: SCSL positions itself as a provider of office experience and managed campus platforms. Their core strategy involves securing long-term contracts with MNC clients, which has proven beneficial. The company focuses on leasing entire, large, bare shell properties in prime locations and converting them into fully serviced, aesthetically pleasing, and tech-enabled ‘Smartworks’ branded campuses.
• Revenue Model: The company’s primary revenue streams include lease rentals from co-working spaces, complemented by income from ancillary services, design and fit-out services, and software fees. Rental income from operating leases is recognized on a straight-line basis over the lease term.
• Business Strategy: SCSL’s strategy is centered on providing value-centric pricing and a superior office experience to make enterprises more productive. They typically engage in long-term lease agreements with landlords, ranging from 10 to 15 years, usually with a lock-in period of up to five years for SCSL. This approach allows for economies of scale and efficient asset management.
• Risks: A key concern is the company’s consistent net losses over the last three fiscals. Operationally, a significant portion of their rental revenue (75.19% in FY25) comes from four cities (Pune, Bengaluru, Hyderabad, and Mumbai), exposing them to regional market fluctuations. The flexible workspace industry is also highly competitive.
• Litigations/Complaints: Following the Draft Red Herring Prospectus (DRHP) filing, several complaints have been lodged against the company, its promoters, and promoter group members. These allegations, from anonymous and identified complainants, include claims of financial discrepancies, bribing media, and fund misuse. The company has consistently denied these, asserting they are baseless and unsubstantiated.
• Revenue Split by Product (FY25): Lease rentals accounted for ₹12,892.73 million, design and fit-out services for ₹347.04 million, ancillary services for ₹488.79 million, and software fees for ₹12.00 million.
• International Footprint: While India accounts for the majority of their revenue, the company’s expansion into Singapore is a strategic move to explore further business opportunities in the Asia Pacific region.
• Capacity Utilization: The occupancy rate in their Operational Centres has shown an upward trend: 83.12% in FY25, 79.77% in FY24, and 76.74% in FY23.
• Client Management: The Seats Retention Rate was 86.83% in FY25, demonstrating the company’s ability to retain clients after their lock-in periods.
• Some of the major enterprise clients of Smartworks Coworking Spaces Limited include
  • Google IT Services India
  • L&T Technology Services
  • Bridgestone India
• Working Capital & Receivables: As of March 31, 2025, the company’s current liabilities exceeded its current assets by ₹9,613.65 million. However, the management highlights long-term lease agreements, positive cash flows from operations, consistent customer retention, and the strategic utilization of security deposits (classified as current liabilities) to manage this. They also indicate plans for new larger centers to improve cost efficiency and revenue generation, backed by external borrowings.

Peers

As per the offer document, Smartworks Coworking Spaces Limited has identified Awfis Space Solutions Limited as its peer.

Management Commentary

The management of Smartworks states that SEBI has allowed them to float their IPO under Rule 6(1) despite reporting net losses, citing their cash EBITDA growth over the past three fiscals. They highlight their business model, which relies on properties from over 80% non-institutional landlords/investors, providing significant leverage and better pricing/valuations. Management is optimistic, expecting a turnaround by the end of the current fiscal year and future growth in net earnings. This positive outlook is partly driven by the planned repayment of ₹114 crore debt, which will result in savings in finance costs and an improvement in net margins. They also note a market trend where companies are shifting from small to larger office spaces, positioning Smartworks favorably as MNCs increasingly establish a presence in India.

Opinion

• I am likely apply to the Smartworks Coworking Spaces IPO. I will update my final opinion here, mostly few hours before the closing.
• Final Opinion: Only very moderate applications. Would prefer to invest in Travel Foods at this point of time.
• From a macro perspective, the flexible workspace segment in India is experiencing strong growth, with SCSL itself outpacing the industry in SBA expansion. The company’s focus on MNCs and long-term contracts, along with its cash EBITDA growth, are positive indicators. However, the company has consistently reported net losses though it is EBIDTA positive.
• Smartworks targets mid-to-large corporates with entire-building leases and customized campuses — this drives high retention (~87 %) and seat occupancy (~83 %). while EBITDA is healthy, depreciation and finance costs under Ind‑AS mask a positive underlying operating profit.
• GMP (currently ~4-5 % premium)
• This post is exploratory and educational purposes only.
• 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.