Smartworks Coworking Spaces IPO

As of 31 March 2024, they were the largest managed campus operator among benchmarked operators in terms of total stock, with a lease-signed portfolio of 8.0 million square feet (Source: CBRE Report). They have a total of four lease-signed centres in India above 0.5 million square feet in size, with the largest centre of approximately 0.7 million square feet located in Vaishnavi Tech Park in Sarjapur, ORR in Bengaluru (Source: CBRE Report). Their managed campus platform consists of a total SBA of 8.99 million square feet across 50 centres in 15 cities such as Bengaluru (Karnataka), Pune (Maharashtra), Hyderabad (Telangana), Gurugram (Haryana), Mumbai (Maharashtra), Noida (Uttar Pradesh) and Chennai (Tamil Nadu), with 203,118 capacity seats, as of 31 March 2025.

Their ability lies in partnering with landlords, especially passive and non-institutional ones, to lease entire/large properties in key clusters in India. As of 31 March 2025, they are present across 14 Indian cities and in Singapore. The 28 key clusters identified across Tier 1 cities account for around 80% of total flexible workspace stock in these cities (Source: CBRE Report). As of 31 March 2025, they are present in 19 out of these 28 key clusters. About 94.37% of the SBA under their management as of 31 March 2025 is in these key clusters in India's Tier 1 cities. They focus on leasing entire/large, bare shell properties in prime locations from landlords and transforming them into fully serviced, aesthetically pleasing and tech-enabled campuses with daily-life and aspirational amenities.

They cater to the needs of all team sizes, from under 50 to over 6,300 seats, with a specific focus on mid and large enterprises that typically require over 300 seats. They believe their ability to serve their clients' customised infrastructure and operational requirements makes them a suitable partner. Their largest client deal size was over 6,300 seats in fiscal 2025, over 4,800 seats in fiscal 2024, and over 3,500 seats in fiscal 2023, demonstrating their value proposition and focus on serving large enterprises.

Their commercial model and standardised operations resonate with the price-conscious ethos of the Indian market. They standardise designs, use modular and reusable fit-outs, achieve economies of scale and leverage proprietary technology in their facility build-out and operations. They offer superior office experiences with aesthetically pleasing designs by understanding their clients' functional requirements and preferences to offer customised solutions. This also ensures their clients get superior workspaces that adapt to their evolving needs. Since in flexible workspace solutions the upfront capital required to build the facility is usually invested by the operator, flexible workspace solutions can support the end user in circumventing the need for upfront capital investment in their office fit-outs (Source: CBRE Report). This may provide an option for end-user organisations to allocate the same capital towards their core business activities or another purpose of choice (Source: CBRE Report).

Their payback period, which is the time period for recovery of capital invested at a centre level, is shorter than the industry payback period. Furthermore, the payback period for the operator is expected to be 51-52 months from the fit-out commencement cycle and nearly 45-46 months from the date of operations (Source: CBRE Report). As of 31 March 2025, the average payback period for their mature centres is 30-32 months from the date of deployment of capital for fit-outs. They have an efficient financial model that helps them save their equity on capital expenditure and working capital. They use customer deposits to fund some of their capital expenditure for fit-outs. Furthermore, their long-term contracts and continued relationships with large enterprise clients enable them to secure lease rental discounting at competitive rates from major financial institutions, using locked-in rental payments as collateral.

Their business model based on risk-mitigating strategy ensures they grow and thrive in a competitive market while providing a stable and predictable environment to their clients. Asset liability mismatch risk: Their focus on mid-to-large enterprises sets them apart and drives longer lock-in periods and client retention. Their pricing strategy strives to achieve rental revenue from clients that is at least double the lease rentals they owe to their landlords. As of 31 March 2025, in terms of the existing contractual arrangements with their clients and the balance lease period with them, the contracted lease rental income covers their rental obligations for fiscal 2026 and fiscal 2027, in terms of the lease agreements executed with their landlords.

Their growth in the managed workspace industry is a testament to the strength of their leadership team. Comprising experienced professionals and young entrepreneurs, their leadership team has experience across real estate, operations, finance and consulting. Their leadership team is led by Neetish Sarda, who holds a Bachelor's degree in Science from the University of London. Since his early days, he has grown up learning about large-scale operations of his family businesses in manufacturing and information technology. He is complemented by Harsh Binani, their co-founder and one of their promoters, who holds a Bachelor's degree in Economics (Honours) from Shri Ram College of Commerce, University of Delhi and a Master's in Business Administration from J.L. Kellogg School of Management, Northwestern University, USA with specialisation in Finance. Harsh was associated with McKinsey & Co, Chicago in the past, where he served large, global corporations across sectors on strategy, finance and organisation topics.

The top four cities in which they operate, namely Pune (Maharashtra), Bengaluru (Karnataka), Hyderabad (Telangana) and Mumbai (Maharashtra), constituted 75.19%, 80.07% and 77.85% of their Rental Revenue for fiscals 2025, 2024 and 2023 respectively. If they are unable to retain their clients in their centres located in these top four cities due to increased competition or reduced demand, it will decrease their revenue and growth, adversely affecting their business, results of operations and financial condition. Furthermore, any significant disruption – whether from social, political or economic factors, natural calamities, civil disruptions, or changes in local state government policies – in these cities that adversely impacts their operations or leads to centre closures will significantly reduce their revenue without equivalent cost reductions, adversely affecting their business, results of operations and financial condition.

The managed and flexible workspace industry in India is intensely competitive. They compete against both organised and unorganised sectors, including large multinationals, Indian companies, and regional/local operators in their operating regions. Some competitors may be major players or form alliances against them, possess greater financial resources, secure better lease terms, or have stronger brand recognition. Major workspace providers may have competitive advantages through global operations, greater brand recognition, and superior marketing/distribution networks. They cannot assure that competitors won't lower rates, offer better services/amenities, or improve facilities in their markets. Competitors may also increase marketing expenditures, potentially forcing them to similarly increase spending and adjust pricing strategies, adversely affecting their cash flows and financial condition.

They provide hospitality services (food/beverage, cleaning/housekeeping, and IT services) at their centres through third-party providers who must comply with regulatory requirements and their internal health/safety/hygiene procedures. Improper food handling could adversely impact clients' employees' health, while mishandling cleaning chemicals could harm employees, clients and the environment. While they haven't faced liability claims in the past three fiscals, failure to meet safety/health standards could result in claims exceeding their insurance coverage.

They've implemented IT solutions covering property management, design/project management, space booking, visitor access, F&B purchases, CRM and data security. These systems remain vulnerable to damage/interruption from various sources, which could materially adversely affect operations. Business continuity depends on these IT systems functioning properly, though they're susceptible to malfunctions/interruptions from equipment damage, power outages, viruses and other hardware/software/network issues. While they haven't experienced significant IT disruptions in the past three fiscals, large-scale failures could disrupt operations, compromise sensitive data, damage their reputation, and materially adversely affect their business, financial condition, results of operations and cash flows.

They're subject to various laws/regulations in their operating jurisdictions. Their landlords must also comply with similar building/property regulations, and non-compliance by either party could adversely impact their business. While no operations have been disrupted/shut down due to regulatory non-compliance in the past three fiscals, any future failures could result in operational disruptions and centre shutdowns.

As of 31 March 2025, they have 794 permanent employees plus contract personnel for security/housekeeping through third-party agencies. While no employees are currently unionised, future unionisation could lead to work stoppages/slowdowns/strikes, materially adversely affecting their business. Union representation could also increase labour costs and strike risks, further adversely impacting their business, financial condition, results of operations, cash flows and prospects.

They're committed to ensuring safety/security for clients, employees and assets against natural/man-made threats including extreme weather, civil/political unrest, violence, terrorism, organised crime, fraud, cybercrime, pandemics, fires, accidents, health crises and petty crime. Serious incidents could escalate into crises, potentially causing reputational damage, compensation claims, regulatory fines and litigation. Centre accidents could result in injuries, fatalities, property damage and operational suspensions.

India's commercial real estate sector condition, particularly land prices and availability of large leaseable properties, significantly impacts their revenues and operations. Being cyclical, real estate markets may experience recessions, slowdowns, increased property taxes, regulatory changes, or financing shortages that could reduce managed workspace demand, adversely affecting their business, results of operations and financial condition.