Buy Smartworks Coworking Spaces Ltd for Target Rs. 630 by Choice Institutional Equities
Key Conference Call Highlights
Operations:
* Total footprint including LOIs now stands at 16.1 msf, with 100% of FY27 supply visibility and high 75% visibility for FY28E
* Presence across 15 cities, serving 770+ clients
* Committed occupied seats reached 1,91,000
* Became the first listed flexible workspace platform in India to cross 10.1 msf of operational footprint – representing more than 10% of the total leased workspace market in India
* The 1,000+ seat cohort is increasing from 29% to 37% of revenue at an average tenure exceeding 48 months
* A 3,000-seat and a 2,000-seat deal were signed in Q4FY26
* Client mix continues to diversify: IT/ITeS has declined from 42% to 39% over the last year, while GCC revenue now exceeds 15% of rental revenue
* No single client typically occupies more than 30% of any campus
* 31% of revenue from multi-city clients; 30% of growth driven by existing clients
* Mature centres occupancy stood at 89%; And committed mature occupancy stood at 93% by FY26-end
* Overall occupancy dropped by 70bps to 82% in Q4FY26 as additional 0.9 msf has been operationalised in this quarter
* SmartVantage is seeing strong demand from GCC, gaining traction and expected to contribute to bottom line in FY27E
Financials:
* Concluded FY26 at net-debt-negative, with cash and bank balances exceeding gross debt, confirming a capital structure which funds expansion through internal accruals
* Gross debt declined more than by 50% since its IPO in July 2025, cost of borrowing fell 180 bps to below 9% YoY.
* ROCE rose sharply, from 7.3% in FY25 to 16.0% in FY26 as centres move past payback and operate at sustained, high occupancy
* Maintenance Capex: ~6%-8% of normalised gross block; the same on per sq ft is ~12%–5% of initial capex psf
* The company mitigates rising rental inflation via long-term landlord contracts and selective location
* West Asia conflict flagged: The management has baked in ~5% cost increase, which is, at present, absorbed by volume discounts
Guidance:
* SMARTWOR enters FY27E with a strong multi-year contracted rental revenue visibility of more than INR 52.0 Bn
* Revenue to grow by 28–30% with EBITDA margin of ~20% in FY27
* GCCs account for over 15% of rental revenue; the management is expecting this share to double over the next few years
* Guided 40–45% growth in VAS (value-added Services) revenue as monetization of campus amenities accelerate with footprint
* Annual seat addition: 45,000 to 50,000 per year
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