Smartworks Coworking IPO: Should You Invest in This Office Space Giant?

Smartworks Coworking Spaces is currently open for subscription with its ₹582.56 crore IPO, and investor interest is steadily building. As of Day 2 (July 11, 2025, 5:15 PM), the issue has been subscribed to around 74%, and the GMP stands at ₹25, a 6.14% premium over the upper price band of ₹407. With flexible workspaces gaining traction in India, this IPO gives investors exposure to a fast-growing, enterprise-focused workspace brand. In this blog, we break down what Smartworks does, how it earns, its financials, strengths, risks, peer comparison, and our expert view to help you make an informed decision.

IPO Overview

• IPO Date: July 10 to July 14, 2025
• Total Issue Size: ₹582.56 crore
• Price Band: ₹387 – ₹407 per share
• Lot Size: 36 shares per lot
• Subscription Status: As of July 11, 2025, 5:15 PM, the IPO has been subscribed by 0.74 times.
• GMP: The Smartworks Coworking IPO GMP (Grey Market Premium) is ₹25 as of July 11, 2025, as per Chittorgarh.com. As per this GMP, the company’s share may get listed at ₹441 with a premium of 8.35%. Disclaimer: GMP is an unofficial indicator and is subject to market volatility.

About Smartworks

Smartworks Coworking Spaces Limited is a managed campus and office experience platform. The company leases bare shell properties, transforms them into fully serviced, tech-enabled office spaces, and offers additional services like cafeterias, crèches, smart stores, and fit-out services.

Their target customers? Mid-to-large enterprises requiring over 300 seats. As of March 2025, Smartworks manages 8.99 million sq. ft. across 50 centres and has an 83.12% occupancy rate with 738 enterprise clients.

How Smartworks Makes Money?

As per the information filed in the RHP (Red Herring Prospectus), Smartworks primarily generates revenue from long-term lease rentals, which contribute nearly 94% of its total income. Additional services like food courts and gyms bring in another 3.6%, while its design and fit-out (FaaS) segment adds 2.5%. Its own in-house software tools, which streamline office operations for clients, contribute a small 0.1%. This mix indicates a stable, rental-led business model with growing revenue from value-added services.

Objectives of the IPO

The IPO proceeds will be used for the following purposes. Around ₹114 crore will go towards reducing outstanding debt. Approximately ₹225.8 crore will be used for expanding office space and installing new fit-outs. The remainder will support general corporate needs. The OFS portion involves partial exits by NS Niketan LLP, SNS Infrarealty LLP, and Space Solutions India Pte. Ltd., providing liquidity without affecting operations.

Strengths

Smartworks has seen explosive revenue growth, with a 37.6% CAGR over the past three years. Its 83.12% occupancy rate signals strong demand from enterprise clients, and 86.83% seat retention indicates stickiness. Operational efficiency is also a standout, with fit-out costs 43% below industry norms. The company’s in-house technology, such as BuildX, accelerates fit-out timelines and offers an edge over traditional real estate players.

Key Risks

Despite its top-line growth, Smartworks remains loss-making, with a ₹63 crore net loss in FY25. Its revenue is geographically concentrated, with 75% coming from just four cities, exposing it to local economic shifts. The company operates mostly on short-term contracts, increasing client churn risk. Additionally, any increase in lease renewal costs could reduce its profits. Lastly, allegations and regulatory concerns—although denied—pose reputational and legal risks.

For a detailed view, visit the Smartworks Coworking IPO page.

Competitor Comparison

When compared to its key rival, Awfis Space Solutions, Smartworks presents a mixed but interesting picture for investors:

The Profitability Gap: This is the most critical point. Smartworks is currently loss-making (₹63 Cr loss in FY25), while its main listed competitor, Awfis, recently turned profitable (₹678 Cr profit in FY25). This makes Awfis a more financially stable choice from a pure profit perspective.

Scale: More Seats, Fewer Clients: While Awfis has more centres (180 vs. 50) and a larger client base, Smartworks is the leader in total capacity seats (over 203,000). This highlights its unique strategy of focusing on large enterprise clients who require bigger office spaces, rather than a higher volume of smaller clients.

Operational Strength: Smartworks shines in operational efficiency. Its EBITDA margin of 62.4% is nearly double that of Awfis (33.3%). This indicates that its core operations are very profitable, even if the company hasn't yet achieved a net profit after all expenses.

A Look at the Valuation: Is the IPO Fairly Priced?

Valuing a high-growth, loss-making company like Smartworks requires looking beyond standard metrics.

No P/E, High P/BV: Since Smartworks is not yet profitable, a Price-to-Earnings (P/E) ratio isn't applicable. Instead, looking at its Price-to-Book Value (P/BV), the IPO appears aggressively priced. At the upper price band of ₹407, the company is valued at over 38 times its Net Asset Value (NAV) of ₹10.55 per share.

It’s like buying a toffee worth ₹1 for ₹38, just because it has a fancy brand tag. This suggests the IPO is quite expensive compared to what the company actually owns on paper (Net Asset Value).

Why the High Price? The premium valuation hinges on the company's excellent operational strength. Its EBITDA margin of 62.4% is nearly double that of its main competitor, Awfis, proving its core business is highly efficient. In simple terms, Smartworks earns ₹62 in operating profit for every ₹100 in revenue, almost 2x more efficient than Awfis.

Valuation Verdict:

The valuation is a clear bet on future potential, not current earnings. Investors are paying a premium for Smartworks' operational efficiency, banking on its ability to turn profitable soon. The pricing is aggressive, and its justification rests entirely on the company delivering strong future growth.

Industry Outlook

India's flexible office space market is witnessing strong momentum. The total office stock stands at 883 million sq. ft (2025), of which the flex segment accounts for around 85 million sq. ft. This is projected to rise to 140–144 million sq. ft. by 2027, potentially worth ₹730–₹960 billion. This demand is driven by hybrid work, enterprise cost optimization, and the rise of Global Capability Centers (GCCs) in India.

Growth Drivers

• Large enterprises shifting from traditional leases to managed campuses
• Rising demand from global firms establishing GCCs in India
• Preference for tech-enabled, plug-and-play workspaces
• Increasing hybrid workforce needing flexible, scalable solutions

Challenges

• Over 500+ competitors in the flex space segment, both regional and national
• Dependence on metro cities for revenue poses regional concentration risk
• Client churn is a concern due to shorter contract lengths
• Rising input and lease costs could compress margins over time

Analyst View

Smartworks has built a solid presence in the managed office segment, with large enterprise clients, strong seat retention, and impressive cost efficiency. The EBITDA margin of 62% in FY25 indicates sound operational performance, outpacing peers like Awfis. However, the consistent net losses, reliance on four cities for bulk revenue, and short contract durations are key concerns.

This IPO may be suitable for investors with a higher risk appetite and a long-term investment horizon who are bullish on the growth of India's commercial real estate and flexible workspace sector. Investors seeking immediate profitability might want to observe the company's performance post-listing.

Other Upcoming IPOs to Watch

Looking to explore what’s coming next on the IPO calendar? Here are some highly anticipated IPOs that could hit the markets soon:

Note: These companies are either in the DRHP stage or expected to file soon.

How to Apply for an IPO on INDmoney?

1. Download the INDmoney app and complete your KYC to open an account.
2. Go to the INDstocks section and tap on IPO, or search for ‘IPO’.
3. Select your preferred IPO from the list of live IPOs.
4. View key details like price band, lot size, and dates, then tap ‘Apply Now’.
5. Choose the number of lots and place your order via UPI. Your funds will be blocked until the share allotment is finalized.

For a seamless application process, visit the INDmoney IPO page.

Disclaimer

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