IPO Note : Smartworks Coworking Spaces Ltd by Geojit Financial Services Ltd
An asset-light, scalable & managed campus workspace operator...
Smartworks Coworking Spaces Ltd (SCSL), incorporated in 2015, is India’s largest managed campus operator offering 8.99mn sq. ft. of leased and managed space across 50 centres in 15 cities (as of March 2025). Catering to mid-to-large enterprises, SCSL converts bare-shell properties into fully serviced, tech-enabled campuses featuring amenities like cafeterias, gyms, crèches, medical centres, and convenience stores to boost productivity and employee well-being. As of June 2025, it had a total capacity of 231,548 seats across 48 operational centres (190,421 seats), 2 under fit-out (15,042 seats), and 4 upcoming (26,085 seats).
* In India, flexible workspace stock across Tier 1 cities is expected to grow from 82–86 mn sq. ft. in CY24 to 140–144 mn sq. ft. by CY27, at a CAGR of 18–20%, supported by rising demand, operator expansion, and increasing availability of quality office supply.
* SCSL has consistently outpaced industry growth in Tier 1 cities, with its managed office space growing at a CAGR of 38.37% from 2020 to 2024—over 1.5 times the market rate—driven by early market entry, a strong business model, and a leasing strategy focused on mid-to-large enterprises.
* SCSL’s topline grew at a robust CAGR of ~39%, rising from Rs.711cr in FY23 to Rs.1,374cr in FY25, driven by aggressive office space expansion and steady demand from enterprise clients.
* EBITDA grew at a CAGR of 42%, and EBITDA margins were healthy at 62% (3 yr avg.) over FY23-25, led by an asset-light business model, an enterprise-centric leasing strategy and diversified revenue streams, which are margin accretive.
* Over the past three years, SCSL has reported losses at the PAT level due to heavy depreciation and other non-cash items, despite generating positive operating cash flows.
* SCSL maintains robust operating cash flows, underpinned by strong performance indicators such as a retention rate of ~ 87% in FY25 and a committed operational occupancy of ~89% as of June 2025.
* The debt-to-equity ratio is at 3.7x in FY25 (excluding lease liabilities), and upon utilisation of net proceeds from the IPO for debt repayment (~Rs.114cr), the debt-to-equity ratio will trim down to 0.5x.
* At the upper price band of Rs.407, SCSL is available at Mcap/Adj.EBITDA ratio of 27x (FY25), which appears to be fairly priced compared to its peers.
* Given its asset-light business model, capital efficiency through variable rental and management contracts, and the scale up of new revenue streams (like value-added services & fit–out as a service), which are margin accretive, further strengthen the business going forward. Hence, we recommend a ‘Subscribe’ rating on a long-term basis.
Purpose of IPO
The issue consists of a fresh issue of Rs.445cr and an OFS (offer for sale) of Rs.137.6cr totalling to Rs.582.6cr. The net proceeds from IPO will be utilised for repayment/prepayment, in full or in part, of certain borrowings availed by the company (~Rs.114cr), capital expenditure for fit-outs in new centers & for security deposits of new centers (Rs.226cr) and general corporate purposes.
Key Risks
* Revenue concentration: Despite pan-India presence, ~75% of revenue (FY25) is derived from centers in 4 regions (Pune, Bengaluru, Hyderabad and Mumbai).
* Adverse macroeconomic trends or a slowdown in the IT sector could affect SCSL’s business performance.
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SEBI Registration Number: INH200000345
