Smartworks IPO Targets ₹4,645 Crore Valuation: What Investors Need to Know

Smartworks IPO: Smartworks Coworking Spaces Limited, a Kolkata-based company founded by Neetish Sarda and co-founded by Harsh Binani, is poised to achieve a post-IPO valuation of approximately ₹4,645 crore at the upper end of its price band. The company, a leader in India’s co-working sector, is set to launch its Initial Public Offering (IPO) on July 10, 2025, with a price band of ₹387 to ₹407 per equity share. The IPO will close on July 14, 2025, with listing expected on BSE and NSE on July 17, 2025.

IPO Details and Valuation

The Smartworks IPO comprises a fresh issue of equity shares worth ₹445 crore and an Offer for Sale (OFS) of 33.79 lakh shares, totaling approximately ₹582.56 crore. The fresh issue was reduced from an earlier planned ₹550 crore, and the OFS was scaled back from 67.59 lakh shares, reflecting a strategic downsizing. At the upper price band of ₹407, the company’s market capitalization is expected to reach ₹4,645 crore, slightly below its listed competitor AWFIS, which is valued at around ₹4,800 crore. Sources indicate that Smartworks’ valuation is at a discount compared to AWFIS, aligning closely with industry peers.

The net proceeds from the fresh issue will be allocated as follows:

• ₹225.84 crore for capital expenditure on fit-outs and security deposits for new centers.
• ₹114 crore for repayment or prepayment of certain borrowings.
• The remaining funds for general corporate purposes.

The IPO reserves 50% of shares for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs), and 35% for retail investors, with a minimum lot size of 36 shares (₹14,652 at the upper price band). Employees are eligible for a ₹37 per share discount under a reserved quota.

Financial Performance and Growth

Smartworks has shown robust growth, with revenue from operations nearly doubling from ₹711 crore in FY23 to ₹1,374 crore in FY25, reflecting a Compound Annual Growth Rate (CAGR) of 38.9%. Adjusted EBITDA surged from ₹36 crore to ₹172 crore over the same period, achieving a CAGR of 117%. However, the company reported a net loss of ₹63.18 crore in FY25, up 26.5% from ₹49.96 crore in FY24, attributed to higher expenses outpacing income. Management remains optimistic, citing plans to achieve profitability by increasing revenue and optimizing costs.

As of June 30, 2025, Smartworks operates 50 centers across 15 Indian cities, including Bengaluru, Mumbai, Hyderabad, Gurugram, and Chennai, with a total managed super built-up area (SBA) of 10.08 million square feet, up from 8 million square feet in FY24. The company added 2.83 million square feet between FY23 and FY25, achieving a 20.8% CAGR in managed space. It serves 728 clients with 169,541 committed seats (89.03% occupancy), including major corporates and startups.

Business Model and Market Position

Smartworks is India’s largest managed campus operator, leasing large bare-shell properties and transforming them into tech-enabled, fully serviced workspaces with amenities like cafeterias, gyms, and medical centers. Its focus on mid-to-large enterprises, with clients typically requiring over 300 seats, has driven a client base of 738 as of March 31, 2025. The company’s largest center, Vaishnavi Tech Park in Bengaluru, spans 0.7 million square feet. Smartworks also operates two centers in Singapore, covering 35,036 square feet.

Despite challenges, such as 19 clients terminating agreements early in FY25 (compared to 7 in FY24), Smartworks maintains a capital-efficient model with a payback period of 30-32 months for mature centers. Its proprietary technology, including BuildX for virtual building management, enhances operational efficiency. The company’s contracted lease rental income during lock-in periods stands at ₹2,060.41 crore, providing revenue visibility.

Promoter and Regulatory Context

Promoters Neetish Sarda, Harsh Binani, and others currently hold a 65% stake, which will reduce to 58.2% post-IPO due to the OFS, primarily by Keppel Ltd. and promoters. Allegations of investigations involving promoter group member Ghanshyam Sarda were addressed in the Red Herring Prospectus (RHP), with Smartworks denying ongoing probes by SEBI, CBI, or the Enforcement Directorate. An Income Tax assessment for FY19–20 is under appeal, but no major demands are pending.

Market Outlook and Investor Considerations

India’s commercial office stock grew to 883 million square feet by Q1 CY2025, with 80% in non-SEZ spaces, fueling demand for flexible workspaces. Smartworks’ 94.37% presence in key Tier 1 city clusters and a cost-efficient model (₹1,350 per square foot capex) position it well against competitors like AWFIS. However, its net losses and early client terminations highlight risks. Analysts recommend a long-term investment approach, given the company’s growth trajectory and the expanding co-working market.

Conclusion

Smartworks’ IPO, valued at ₹4,645 crore, reflects its strong position in India’s co-working sector, driven by robust revenue growth and an expanding footprint. While losses and client terminations pose challenges, the company’s focus on enterprise clients and tech-driven campuses offers significant potential. Investors should weigh the growth prospects against financial risks and conduct thorough research before subscribing.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Stock market investments are subject to risks. Always consult horrified financial advisor before making investment decisions.

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