Smartworks Coworking IPO opens tomorrow; key risks, strengths you must know

Smartworks Coworking was the largest managed campus operator among the benchmarked operators in terms of total stock as of March 31, 2024

Smartworks Coworking Spaces IPO: The initial public offering of workspace solutions company, Smartworks Coworking Space, will open for bidding on Thursday, July 10, 2025. The mainline offering comprises a fresh issue of 10.9 million equity shares aggregating to ₹455 crore and an offer for sale (OFS) of 3.4 million shares aggregating to ₹137.56 crore. NS Niketan, SNS Infrarealty and Space Solutions India are the selling shareholders.  

 

The three-day subscription window is scheduled to close on Monday, July 14, 2025. Smartworks Coworking IPO is available at a price band of ₹387-407 per share, with a lot size of 36 shares. 

 

 

According to the red herring prospectus (RHP), the company intends to utilise the net fresh issue proceeds for repayment of certain borrowings availed by the company and capital expenditure for fit-outs in the New Centres and for security deposits of the New Centres. The remaining funds will be used for general corporate purposes. 

Here are the key strengths of Smartworks Coworking, as outlined in the RHP:

Market leadership backed by scale and steady growth: As of March 31, 2024, the company was the largest managed campus operator among the benchmarked operators in terms of total stock, with a lease signed portfolio of 8 million square feet. The company's managed campus platform has a total Super Built-up Area (SBA) of 8.99 million square feet across 50 centres in 15 cities, with 203,118 capacity seats as of March 31, 2025. 

 

Additionally, the company reported CAGR of 20.8 per cent in total SBA between March 31, 2023 and March 31, 2025 and CAGR of 38.98 per cent in revenue from operations during the same period. 

 

Focus on acquiring enterprise clients: While the Smartworks Coworking caters to the needs of all team sizes, from under 50 to over 6,300 seats, it specifically focuses on mid and large enterprises that typically have a requirement of over 300 seats. The mid-to-large enterprises generally form long-term commitments, which enhances their business stability and revenue predictability.  ALSO READ | Meta Infotech IPO booked 155x; check allotment status, GMP, listing date 

Strategic execution abilities: According to the DRHP, the company's payback period, which is the period for recovery of capital invested at a centre level, is shorter than the industry payback period. As of March 31, 2025, the average payback period for its Mature Centres is 30-32 months from the date of deployment of capital for fit-outs.

 

Financially stable business model: Smartworks Coworking's focus on mid-to-large enterprises drives longer lock-in

periods and client retention. Additionally, the company follows a diversification strategy by not leasing more than 30 per cent of the space in a centre to a single client. This ensures that no single client dominates the revenue stream and reduces the potential impact on revenues due to client move-outs.

Here are the key risks associated with investing in Smartworks Coworking:

Risks from market concentration: During the financial year 2024-25 (FY25), the company derived 75.19 per cent of its rental revenue from centres across Pune, Bengaluru, Hyderabad and Mumbai. Any adverse developments affecting such locations and centres could adversely impact the business, results of operations and financial condition.

 

Risks from client concentration: As the company focuses on clients who typically require over 300 seats across multiple centres and cities. "We may not have equal negotiating power with such clients, and it may be difficult for us to find suitable replacements upon termination of agreements with such clients, which could adversely affect our business, cash flows, results of operation and financial performance," the company said.  ALSO READ | Travel Food Services IPO ends today; check latest subscription status, GMP 

Earnings instability: The company and some of its subsidiaries have reported losses and have experienced negative cash flows in previous periods. They cannot guarantee that they will achieve or maintain profitability or that losses will not persist in the future.

 

Funding risks: The company incurs significant capital expenses and may need additional funding to fulfil those needs. Their inability to secure financing on favourable terms, or at all, may significantly affect their financial condition, operational outcomes, and cash flow.

 

Risks from macroeconomic factors: Any adverse change in the macroeconomic factors or any adverse impact on the information technology industry can impact their business, results of operations and financial condition.