Smartworks Plans IPO Amid Rising Revenue and Reduced Losses
Smartworks Coworking Spaces Ltd, a prominent player in the managed office space sector, is gearing up for its initial public offering (IPO) following a challenging fiscal year. The company reported a consolidated net loss of approximately ₹50 crore for the 2023-24 fiscal year, a significant reduction from the ₹101 crore loss recorded in the previous year. Despite the losses, Smartworks saw its total income rise to ₹1,113.11 crore, up from ₹744 crore in the prior fiscal year.
The company’s draft red herring prospectus (DRHP) submitted to the Securities and Exchange Board of India (SEBI) outlines plans for the IPO, which includes a fresh issue of equity shares valued at ₹550 crore and an Offer-For-Sale (OFS) of 67.59 lakh shares by the promoters. The proceeds from the IPO are earmarked for several strategic initiatives: ₹140 crore will be allocated for repaying or prepaying certain borrowings, ₹282.3 crore will be used for capital expenditures related to fit-outs and security deposits for new centers, and the remainder will support general corporate purposes.
As of March 31, 2024, Smartworks’ total outstanding borrowings stood at ₹427.35 crore. The company currently operates 41 coworking centers, offering 7.36 million square feet of office space and over 166,000 desks. With an additional 0.79 million square feet and 19,427 desks in the pipeline, the portfolio is set to expand to 43 centers, covering 8.15 million square feet and accommodating 185,467 desks. Smartworks has a presence in 13 cities, including major hubs like Delhi-NCR, Bengaluru, Hyderabad, and Chennai.
Smartworks focuses on leasing large, bare-shell properties in prime locations, transforming them into fully serviced, tech-enabled campuses with modern amenities. The company caters to a diverse clientele, from small teams to large enterprises requiring over 300 seats, with a particular emphasis on mid-to-large enterprises.
Despite achieving positive EBITDA, Smartworks has incurred net losses over the past three fiscal years. The company aims to boost revenue and reduce expenses to reach profitability. The Indian office market, particularly the coworking segment, has rebounded sharply post-COVID, with other players like Awfis and EFC (I) Ltd also exploring public listings.
Smartworks’ strategic expansion and focus on enhancing service offerings position it well to capitalize on the growing demand for flexible office spaces in India.
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