Smartworks Coworking Spaces

• Smartworks Coworking Spaces is coming out with a 100% book building; initial public offering (IPO) of 1,48,88,691 shares of Rs 10 each in a price band Rs 387-407 per equity share.
• Not more than 50% of the issue will be allocated to Qualified Institutional Buyers (QIBs), including 5% to the mutual funds. Further, not less than 15% of the issue will be available for the non-institutional bidders and the remaining 35% for the retail investors.
• The issue will open for subscription on July 10, 2025 and will close on July 14, 2025.
• The shares will be listed on BSE as well as NSE.
• The face value of the share is Rs 10 and is priced 38.70 times of its face value on the lower side and 40.70 times on the higher side.
• Book running lead managers to the issue are JM Financial, BOB Capital Markets, IIFL Capital Services and Kotak Mahindra Capital Company.
• Compliance Officer for the issue is Punam Dargar.

Profile of the company

Smartworks Coworking Spaces is an office experience and managed Campus platform. As of March 31, 2024, it was the largest managed campus operator, amongst the benchmarked operators in terms of total stock, with a lease signed portfolio of 8.0 million square feet. It has leased, and it manages a total SBA of 8.99 million square feet as of March 31, 2025. It strives to make Enterprises and their employees in India more productive at work by providing value-centric pricing and superior office experience vis-a-vis traditional workspaces, with access to enhanced services and amenities. Landlords, especially passive and non-institutional, benefit from the transformation of their bare shell properties into ‘Smartworks’ branded, fully serviced managed Campuses.

It focuses on mid-to-large Enterprises and has built a growing Client base, which includes Indian corporates, MNCs operating in India and startups. It equips its Campuses with modern and aesthetically pleasing designs using its extensive design library, integrated proprietary technology solutions and amenities such as cafeterias, sport zones, Smart Convenience Stores, gymnasiums, creches and medical centres. Some of these amenities take care of the daily needs of the employees of its Clients, and some are aspirational in nature, leading to collaborative workspace and team building. These aspects are likely to enhance well-being, fostering a vibrant and engaging work atmosphere.

As on June 30, 2025, the company has signed term sheets with Landlords in Gurugram for a Centre with a total SBA of 450,000 square feet under the variable rental business model, of which SBA of 33,504 square feet has been operationalised pursuant to agreements entered into by the company with the Landlord and each of the respective clients. It has also taken on lease two Centres in Singapore with a total SBA of 35,036 square feet and serves 83 Clients as on June 30, 2025. Singapore has emerged as one of the preferred locations for corporate headquarters with the highest number of completed regional headquarters in the past 10 years in Asia Pacific (2014 - 2023). Its presence in Singapore provides it the opportunity to explore further business opportunities in both India and Singapore.

Proceed is being used for:

• Repayment/ prepayment/ redemption, in full or in part, of certain borrowings availed by the company
• Capital expenditure for fit-outs in the New Centres and for security deposits of the New Centres (Capex)
• General corporate purposes

Industry Overview

Flexible workspace solutions primarily refer to fully furnished and serviced real estate offerings provided by Flexible Workspace Operators to end users with potential flexibilities built-in around aspects including but not limited to space design, tenure, area, location, and product. Multiple leading operators have also now developed the capability to offer multiple value-added and ancillary products and services. End users may consider one or the other kind of flexible workspace solution for a diverse set of use cases. The popularity and adoption of flexible workspace solutions has witnessed an increase amongst both startups and corporate enterprises, owing to their increasing use cases and constant innovations by leading Flexible Workspace operators. Flexible workspace solutions are becoming an integral part of the modern work culture, catering to diverse working styles and introducing flexibility to the commercial office market.

The flexible workspace stock in India stands over 96 Mn sq. ft. as of Q1 CY2025. While over 88 Mn. sq. ft. of this flexible workspace stock is spread across key tier 1 markets of India, demand for flexible workspaces in NonTier 1 cities has also been growing. The top 10 operators (by portfolio size in area Mn sq. ft., Q1 CY 2025) collectively contribute to majority of the total Pan India flexible workspace stock. Tier 1 cities account for over 88 Mn sq. ft. of the total flexible workspace stock in India as of Q1 CY 2025. The flexible workspace stock across tier 1 markets is forecast to keep growing at least in the near term in response to end user demand. The flexible workspace stock in Non-Tier 1 cities is also forecast to grow further to cater to the anticipated end user demand for office spaces in these cities owing to factors such as hybrid and distributed work policies being implemented by organizations, increased focus on employee wellbeing & retention by organizations, access to the skilled talent pool at competitive costs, improving infrastructure & connectivity and the relatively lower cost of living and cost of real estate in these cities.

India has witnessed growth in demand for flexible workspaces. Flexible workspace stock addition by operators has witnessed growth over the years and approximately 18 - 22 Mn sq. ft. of stock was added in 2024. The share of flexible workspaces stock in Non-SEZ occupied office stock across Tier I cities increased from 7% -9% Pre 2020 to 14% -16% by the end of CY2024. Features and benefits such as flexibility, capital efficiency, cost optimization, employee well-being and operational outsourcing are some of the key demand drivers of Flexible workspace solutions amongst both startups and enterprises. Through a widespread network of centres across the country and with the assistance of various in- house or aggregator owned hybrid digital products, leading flexible workspace operators may possess the ability to support various organizations in a more effective implementation of their hybrid and distributed working policies. 

Pros and strengths

Market leadership backed by scale and steady growth: As of March 31, 2024, it was the largest managed campus operator, amongst the benchmarked operators in terms of total stock, with a lease signed portfolio of 8.0 million square feet. It has a total of four lease signed centers in India above 0.5 million square feet in size, with the largest center of approximately 0.7 million square feet. located in Vaishnavi Tech Park in Sarjapur, ORR in Bengaluru. The company draws strength from its scale of operations and steady growth, leading to industry leadership. Over the last eight years, it has established a Pan-India ‘Smartworks’ brand with proven expertise in managing workspaces.

Ability to lease entire/ large properties in key clusters in India: The company’s ability lies in partnering with Landlords, especially passive and non-institutional, to lease and transform entire/ large properties across India’s key clusters into amenities rich ‘Smartworks’ branded Campuses. As of March 31, 2025, it is present across 14 Indian cities and in Singapore. The 28 key clusters identified across Tier 1 cities account for around 80% of total flexible workspace stock in these cities. It focuses on leasing entire/ large, bare shell properties in prime locations from Landlords and transform them into fully serviced, aesthetically pleasing and tech-enabled Campuses with daily-life and aspirational amenities.

Focus on acquiring Enterprise Clients with higher Seat requirements: The company caters to the needs of all team sizes, from under 50 to over 6,300 Seats, with a specific focus on mid and large Enterprises that typically have a requirement of over 300 Seats. Its ability to serve their customised infrastructure and operational requirements make it a suitable partner for them. Its largest Client deal size was over 6,300 Seats in Fiscal 2025, over 4,800 Seats in Fiscal 2024, and over 3,500 Seats in Fiscal 2023, demonstrating its value proposition and focus on serving large Enterprises.

Execution capabilities backed by cost efficiencies, effective processes and technology infrastructure: The company’s commercial model and standardised operations resonate with the price-conscious ethos of the Indian market. It standardises designs, uses modular and reusable fit-outs, achieves economies of scale and leverages proprietary technology in its facility build out and operations. It offers superior office experiences with aesthetically pleasing designs, by understanding its Clients’ functional requirements and preferences to offer customised solutions. It also ensures that its Clients get superior workspaces that adapt to their evolving needs. Since in flexible workspace solutions the upfront capital required to build the facility is usually invested by the operator, flexible workspace solutions can support the end user in circumventing the need for upfront capital investment in their office fit outs. This may provide an option for end user organizations to allocate the same capital towards their core business activities or another purpose of choice.

Risks and concerns

Maximum revenue comes from Pune, Bengaluru, Hyderabad and Mumbai: As on March 31, 2025, it has leased 50 Centres across 15 cities such as Bengaluru, Pune, Hyderabad, Gurugram, Mumbai, Noida and Chennai with 203, 118 Capacity Seats. The top four cities in which it operates, namely, Pune (Maharashtra), Bengaluru (Karnataka), Hyderabad (Telangana) and Mumbai (Maharashtra) constituted 75.19%, 80.07% and 77.85% of its Rental Revenue for the Fiscals 2025, 2024 and 2023, respectively. If it is unable to retain its Clients in its Centres located in the top four cities due to various factors such as increased competition or reduction in demand, it will lead to a decrease in its revenue and growth, which will have an adverse effect on its business, results of operations and financial condition.

Maximum revenue comes from Clients who typically require over 300 seats: It typically focus on mid-to large Enterprise Clients whose workspace needs exceed 300 Seats, often across multiple Centres and cities, across India and 63.44%, 59.98% and 55.85% of its Rental Revenues for the Fiscals 2025, 2024 and 2023, respectively was generated from Clients with over 300 Seats. Such Clients, given the nature of their requirement of large workspaces, often have a better negotiating ability and may dictate some of the key commercial terms including pricing. Additionally, it may not be able to successfully identify or source Clients with such workspace requirements at favourable commercial terms or at all. There may not be enough Clients with large workspace requirements to take up its offerings or adequate demand in the segment of Clients with such large workspace requirements.

Certain portion of rental revenue is derived from a limited number of Clients: A certain portion of its Rental Revenue is derived from a limited number of Clients including Enterprise Clients and multi-city Clients. The company is dependent on its top 20 Clients, as well as Enterprise Clients and multi-city Clients for its Rental Revenue. If such Clients prematurely terminate their agreements with it or does not renew their agreements or if it fails to retain such Clients, it may not be able to successfully identify and/or on-board Clients with similar workspace requirements and at favourable commercial terms or at all. If any of the top 20 Clients prematurely terminate their agreements with the company or do not renew their agreements or if it fails to retain such Clients, its business, revenues, cash flows, results of operations, and financial condition may be adversely affected.

High debt-equity ratio: The company’s debt-equity ratio (no. of times) was 2.90, 6.87 and 8.84 for the Fiscals 2025, 2024, and 2023, respectively. A high debt-equity ratio increases the risk of a credit default by the company and could magnify the impact of any increase in the cost of borrowings. A high debt-equity ratio adversely affects its ability to obtain loans from lenders at acceptable commercial terms or at all which in turn may impact its ability to maintain its current growth and adversely affect its business, results of operations and financial condition.

Outlook

Smartworks Coworking Spaces is engaged in the business of customized managed workspace solutions, offering fully serviced, tech-enabled office environments with aesthetic designs and essential amenities to meet the specific needs of enterprises and their employees. The company focus is on acquiring Enterprise Clients with higher Seat requirements as well as emerging mid-to-large Enterprises and growing with them. The company’s risk-mitigating strategy allows it to build a financially stable business model. On the concern side, the company derived 75.19% of its Rental Revenue in FY25 from its Centres located in Pune, Bengaluru, Hyderabad and Mumbai. Any adverse developments affecting such locations and Centres could have an adverse effect on its business, results of operations and financial condition. Moreover, it has substantial capital expenditures and may require additional financing to meet those requirements. Its inability to obtain financing at favourable terms, or at all, may have a material adverse effect on its financial condition, results of operations and cash flows.

The issue has been offering 1,48,88,691 shares in a price band of Rs 387-407 per equity share. The aggregate size of the offer is around Rs 576.19 crore to Rs 605.97 crore based on lower and upper price band respectively. Minimum application is to be made for 36 shares and in multiples thereon, thereafter. On performance front, the company’s revenue from operations increased by 32.20% to Rs 13,740.56 million for Fiscal 2025 from Rs 10,393.64 million for Fiscal 2024. This increase was primarily due to an increase in revenue from lease rentals. However, the company has reported a net loss of Rs 631.79 million as compared to a net loss of Rs 499.57 million.

The company has leased and it manages a total SBA of 8.99 million square feet as of March 31, 2025. It has primarily employed a straight lease model. Its scale has allowed it to establish its brand and industry leadership. As it moves forward, it aims to strategically expand into the variable rental and management contract models as well. In the variable rental model, capital expenditure costs are borne by it, however rental obligations only start once it has leased the respective portion of the space to its Clients. Client security deposits and Landlord contributions on building improvements offset capital expenditure cost, making it a capital efficient strategy. The variable rental model will further de-risk its business and eliminate occupancy-related risks while yielding better unit economics.