Smartworks Coworking Spaces is India’s leading Flexible Workspaces operator. With over 8.0 msft of lease signed portfolio, it is also India’s largest managed campus operator. It focuses on leasing large bare shell properties in prime locations and converting them into fully serviced, modern campuses. While it serves customers of all sizes, it focuses on medium to large enterprises requiring over 300 seats.

Its IPO is aimed at strengthening its balance sheet, funding capex and providing liquidity to existing investors (including promoters).

Offer Details of the IPO

Smartworks Coworking Spaces Limited IPO consists of

• A fresh issue of upto INR 4,450.00 million .
• An offer for sale of upto INR 1,375 million (3,379,740 Equity Shares)

The majority of the offer for sale is being done by its early investor – Keppel (via Space Solutions India). The offer for sale also includes sales by promoter entities – NS Niketan and SNS Infrarealty.

Space Solution India is offering upto 2,579,740 Equity shares.

• Price Band: Rs. 387/- to Rs. 407/- per Equity Share
• BRLM: The issue is being managed by JM Financial Limited, BOB Capital Markets Limited, IIFL Capital Services Limited (formerly known as IIFL Securities Limited), and Kotak Mahindra Capital Company Limited.

Objectives of the IPO:

IPO objectives are to raise funds primarily for de-leveraging and capital expenditures. The proceeds from offer for sale would not accrue to the company. Smartworks plans to utilize the net proceeds to repay debt and fund capex for expansion. Upto 25% of gross proceeds is commonly reserved for general corporate purposes. Smartworks, too, has reserved a similar amount.

De-leveraging/Repayment of Debt

• Repayment/prepayment, in full or in part, of certain outstanding borrowings availed by the company: INR 1,140.00 million
• This accounts for ~30% of total borrowings of the company as of April 30, 2025

Capital Expenditures

• Capital expenditure to the tune of INR 2,258.40 m related to fitouts and security deposits for new centers.

1. INR 1,911.60 m is the amount that is proposed for fitouts of new centers.
2. INR 346.80 m is the amount reserved as security deposits of new centers.

Industry Overview – India Flexible Workspaces Market:

The flexible workspaces market in India refers to the leasing of fully furnished and serviced office spaces tenants can utilize immediately on a pay-as-you-go basis.

This dynamic industry has witnessed significant growth. The overall flexible workspace space in tier 1 cities has increased from more than 35 million square feet as of the end of 2020 to more than 82 million square feet by the end of 2024. It is expected to cross approx 140-144 million square feet by the end of 2027.

One of the factors driving this growth has been the adoption of a ‘Core + Flex’ strategy by companies, which combines leased space and flexible office commitments to drive greater agility and lower capex. This market serves a wide variety of businesses, including start-ups and small-to-medium enterprises (SMEs) as well as larger corporates that are looking for flexible, top of the range and amenity-packed workspaces.

The rise of flexi-workspaces is also directly correlated to the commercial office market in India, which currently stands at 883 million square feet under Q1 CY2025, a number that is expected to rise to 1,072 million square feet by end 2027.

Market Segments

Indian Flexible Workspace is a rapidly growing industry and operates within the Commercial Office Market Segment.

• Overall Indian Commercial Office Market Segment: Total office stock in India stood at 883 million square feet as of Q1 CY2025. This market is primarily focused in nine large Tier-1 cities, including Bengaluru, Mumbai Metropolitan Region (MMR), Hyderabad, Gurugram, Chennai, Pune, Noida, Kolkata and Delhi. This market is expected to increase at a CAGR of 6.7% from 2018 to 2027 to 1072 million square feet by the end of the period. Around 80% of the country’s total commercial organized stock is of Grade A quality. In addition, approximately 70.2% of this stock is held outside the institutions which operators of flexible workspace can exploit by converting a bare shell to the managed campus.
• Flexible Workspace Segment: The total flexible workspace stock in India (including Tier 1 and Non-Tier 1 cities) as of Q1 CY2025 was over 96 million square feet with over 500 operators and on 2,200 unique centre locations. In particular, flexible workspace supply in Tier 1 cities has grown significantly, expanding from 35m+ square feet at the end of 2020 to 82m+ square feet by the end of 2024, indicative of a CAGR of c23-24%. This rapid expansion is expected to continue where the stock of flexible workspace in Tier 1 cities is expected to touch around 140-144 million sq ft, growing at a projected CAGR of 18-20% by CY2027.

The growth is being fuelled by the rapidly growing acceptance of a ‘Core + Flex’ approach within the corporate sector – where businesses are blending traditional leased space with flexible office agreements to increase agility, lower capital expenditure and boost the employee experience.

Key Driving Factors

Several factors are contributing to the growth of India’s flexible workspace market:

1. Large Pool of English-Speaking Talent: With the largest youth population in the world and a large number of English speaking qualified STEM graduates, India is the one of the most preferred destinations for global companies
2. Cost Competitive: The country has a distinct cost advantage with lower operating costs for services and tech talent, compared to most other international market.
3. Surge in GCCs: The rise of GCCs in India; which are expanding footprint due to the available talent pool and conducive regulatory landscape is serving as a critical demand generator for office spaces
4. New age domestic companies and start-ups: Supported by stable economic growth and a strong financial system, homegrown Indian companies along with a vibrant entrepreneur start-up ecosystem are significantly driving the demand for commercial office space.
5. Rising Demand for Quality Flexible Space: Firms are focusing on flexible, high-quality offices with contemporary amenities and cutting-edge technology supporting hybrid work models, while providing an enhanced experience for employees.
6. Government Initiatives: The Government initiatives like ‘make in India’, ‘start­up India’ and increasing ease of doing business, and up­gradation in infrastructure create a favorable environment for business and overall real estate growth.

Company Overview – Smartworks Coworking Spaces

Smartworks Coworking Spaces Limited operates as an office experience and managed campus platform. As of March 31, 2024, Smartworks was the largest of the benchmarked managed campus operators with a lease-signed portfolio totalling 8.0 msf. As of March 31, 2025, the total super builtup area operated by the company expanded to 8.99 million square feet (across 50 Centres) in 15 cities, comprising 203,118 Capacity Seats. While the company’s ideal customers are mid-to-large Enterprises that need more than 300 Seats, it serves all team sizes ranging from under 50 and up to over 6,300 Seats.

Smartworks converts bare shell properties at strategic, central locations to instant, functional and fully equipped offices through tailored fit-outs and technology enabled offering which includes intelligent security systems, efficient HVAC systems, smart lighting, and a range of other technology offerings along with pan-India operations with flexible leases terms suited to varied business needs.

.The firm’s numerous land leases with Landlords (10-15 years) and emphasis on high-value properties create economies of scale and dampens the cyclical risk inherent to commercial real estate markets.

Its key business segments include:

Managed Workspace Solution (Straight Lease Model):

This is the company’s flagship service. Smartworks acquires bare shell properties for long term, transforms them and offers as fully managed, tech enabled spaces to Enterprise. Under this agreement, Smartworks takes the onus of the initial fit-out cost, building maintenance and lease rentals liability. This enables clients to realize financial and capital efficiencies while concentrating on their core business. Clients benefit from a simple, standardized, hassle-free, one-stop solution to their workplace requirements.

Variable Rental Business Model:

This is an asset-light model that improves the capital efficiency of Smartworks. Under this model, the company is responsible for capital expenditure costs, with the rental commitments only starting once the space is leased to customers. This model uses funds of client security deposits and lease rental discounting for capital needs. The model is still in its nascency as only 33,504 sq ft has been made operational as against term-sheets signed for a total of 450,000 sq ft.

Value Added Services (VAS):

Smartworks offers a range of value-added services which are available on a revenue-sharing basis by introducing service partners. The services are developed to foster the workplace and offer features like microwave cafeterias, sports zones, Smart Convenience Stores, gyms, crèches and medical centres.

Fit-out-as-a-Service (FaaS):

This is a complementary business which provides design and built services to companies for their owned or leased offices. The service is backed by Smartworks’ expansive vendor network and its in-house design and R&D teams. The company leverages its experience to offer trusted, compliant and cost effective fit-out offerings using group buying power and strong vendor negotiation skills. FaaS is also an light-asset and margin accretive business.

Competitive Landscape

The managed and flexible workspace sector in India is highly competitive – with 500 flexible workspace operators competing across the country and managing over 2,200 unique centre locations. The market includes both organised and unorganised players. It includes established multinationals and Indian companies, as well as small regional and local players.

There are inherent threats and challenges that the industry encounters such as: the threat of market saturation which might lead to pricing pressure; the risk of economic downturn, the difficulty in maintaining the existing short-term customers as well as find new ones and therefore increase vacancy risks. Operators must also factor in client churn, with the majority of clients signing short to medium term solutions.

The key competitors for Smartworks includes Awfis Soutions, WeWork India and Table Space Technologies.

Competitive positioning:

Mid-to-Large Enterprise Focus: Smartworks has a dedicated focus on mid-to-large Enterprise Clients generally requiring more than 300 Seats, spanning multiple Business Centres and cities. This helps them secure longer lock-in periods.

Handle large sized property transformations: The company leases full or large bare shell properties from landlords and converts them into world class, aesthetically pleasing, fully amenitized and tech enabled ‘Smartworks’ branded Campuses. This strategy profits from economics of scale and results in lower operating costs,while enabling pooling of all-inclusive amenities. Smartworks can accelerate fit-outs and offer fully-configured offices to clients at a speed of 45-60 days from the date of a contract signing.”

Comprehensive Amenities and VAS: Smartworks enriches its employee experiences by offering modern décor campuses along with numerous amenities including Cafeteria, Sport Zones, Smart Convenience Stores, Gymnasiums, Creches, Medical Centres etc.

Integrated Proprietary Technology Infrastructure: Smartworks uses their in-house developed proprietary technology – BuildX for design and project management, CRM for sales and client management & property management tools for access control, bookings, and facility management. This stack is critical to operate efficiently and to optimize as well as delivering a differentiated and a lasting client experience.

Financial Acumen and Risk Mitigation: Smartworks follows a risk mitigating approach where the rentals committed by the clients are at least two times of the lease rentals committed with the landlords.

High Client Retention: Smartworks has a high Seats Retention Rate of 86.83%. This high retention rate minimizes the company’s reliance on property consultants and brokers for tenancy.

Financial Performance

Revenue Growth:

Smartworks Coworking Spaces Limited has shown steady and robust growth in its Revenue from Operations in the last 3 Fiscals. The company’s revenue increased to INR 10,393.64 million for the period ended Fiscal 2024, up 46.10% from INR 7,113.92 million during Fiscal 2023. The increase trend in revenue from operations continued in Fiscal 2025, generating INR 13,740.56 million, an increase of 32.20% compared to Fiscal 2024. This growth is chiefly due to a rise in lease rentals revenue from its larger footprint (in terms of SBA), an increase in the number of Capacity Seats, and improved Occupancy Rate.

Profit Growth:

Even as Smartworks Coworking Spaces Limited posted robust revenue growth, it posted losses in all the fiscals under consideration.

For Fiscal 2023, the company posted a restated loss of INR 1,010.46 million. The restated loss narrowed by 50.56% to INR  499.57 million for Fiscal 2024. However, in the FY 2025, the revised loss increased again by 26.47% to INR 631.79 million.

Cash flow:

Operating net cash flows have been consistently positive and increasing, which denotes healthy cash generation from operations. Up from INR 5,318.32 million in FY23, INR 7,433.00 million in FY24 FY25- INR 9,285.16 million

However, the net cash used in investing activities has remained negative on all terms and means substantial investment in company’s capital. The outflows would be (INR 3,066.30) million in FY 2023, (INR 1,921.59) million in FY 2024 and (INR 2,760.77) million in FY 2025. Most of these outflows were related to amount spent on property, plant and equipment, intangible assets and capital WIP due to continued investment in expanding the network of Centres and fit-outs.

The net cash outflow from financing activities has been INR 1,705.81 million in 2023; more than doubling to INR 5,771.80 million in 2024, and further increasing to INR 6,377.07 million in 2025. The main outflows of cash consists of high payments for principal and interest of the lease liabilities as well as repayment of long-term borrowings.

Cash and cash equivalents experienced a INR 260.39 million decrease in Fiscal 2024, as compared to an increase of INR 546.21 million in Fiscal 2023. As of Fiscal 2025, net cash and cash equivalents increased by INR 147.32 million.

Financial Summary

Source: RHP

Peer Comparison

Source: RHP