Flexi Gamble or Future Goldmine? Smartworks IPO Splits Investor Sentiment

Smartworks Coworking Spaces, India's largest working campus manager, has floated its IPO to raise ₹583 crore, which has raised questions about its long-term viability. As a combination of fresh issue and offer for sale, the IPO will be utilized to fund capex and repay debt, but serial losses and high leverage are a concern.

Growth Narrative and Capital

Revenue increased 24.5% YoY to ₹1,374 crore in FY25

EBITDA growth of 26.4% to ₹857 crore, 62.4% margins

In spite of operational profitability, Smartworks made net losses for three straight years

Net debt of ₹299 crore; debt-equity ratio after IPO to fall to 0.5 from 0.8

Business Model and Market Position

Operates 8 million sq. ft. area in 39 offices in 15 cities, serving large companies

Long-term leased asset-light model with technology-enabled campuses

90%+ corporate and MNC top-line revenues ensure stability, but geographic concentration (33% of revenues coming from Pune) is risky.

Valuation and Peer Comparison

3.4 price-to-sales ratio, modestly below listed counterpart Awfis at 3.7

Awfis turned profitable during FY25, while Smartworks remains in losses

Strong fit-out efficiency and packaged products are offering margin opportunity

Investor View

Ideal for risk-taking investors betting on the flexi workspace boom in India

Profitability depends upon occupancy, monetization of services, and rationalization of debt

IPO starts on July 10 and lasts until July 14; listing on July 17

Sources: Economic Times, Value Research, IPO Central, Inc42, IPO Watch India, Business Standard

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