Smartworks Coworking Spaces IPO: issue sails through on day 2; GMP takes a hit

The initial public offering (IPO) of Smartworks Coworking Spaces managed to sail through during the second day of the bidding from process, thanks to overall demand. The issue, which kicked off on Thursday, July 10, was overall subscribed more than half on day one.

Smartworks Coworking Spaces is selling its shares in the price band of Rs 387-407 apiece. Investors can apply for a minimum of 36 shares and its multiples thereafter. It is looking to raise Rs 586.52 crore via IPO, which is a fresh share sale of Rs 445 crore and offer-for-sale (OFS)of up to 33.8 lakh equity shares.

According to the data, the investors made bids for 1,01,85,876 equity shares, or 98 per cent, compared to the 1,04,01,828 equity shares offered for the subscription by 1.50 pm on Friday, July 11, 2025. The three-day bidding for the issue shall conclude on for bidding on Monday, July 14.

The allocation for retail investors was subscribed 97 per cent, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 1.47 times. Allocation of employees was booked 83 per cent. However, the quota set aside for qualified institutional bidders (QIBs) saw bids for 63 per cent as of the same time.

The company, incorporated in 2015 in New Delhi, provides customised managed workspace solutions. It offers fully serviced, tech-enabled office environments tailored to meet the needs of enterprises and their employees. Despite reporting a net loss of Rs 63.18 crore on a revenue of Rs 1,409.67 crore for the fiscal year ending March 31, 2025, the company projects a market capitalisation of Rs 4,644.82 crore.

Smartworks Coworking Spaces, ahead of its IPO, raised Rs 173.64 crore from anchor investors by issuing 42,66,378 shares at Rs 407 each. The IPO includes a reservation worth Rs 3.75 crore for employees, who benefit from a Rs 37 per share discount. The offering is divided, with 50 per cent allocated to qualified institutional buyers (QIBs), 15 per cent to non-institutional investors (NIIs), and 35 per cent to retail investors.

The IPO aims to capitalise on the growing demand for remote and co-working office spaces, although the company currently faces challenges such as high debt and negative cash flows. Financial year 2023-24 saw a net profit of Rs 49.96 crore on revenues of Rs 1,113.11 crore, reflecting a positive turnaround from previous financial outcomes.

In the grey market, Smartworks shares have been trading at a premium of Rs 25-30, indicating potential listing gains of 6-7 per cent for investors. Analysts are optimistic, recommending subscription due to rising revenues and demand, despite some concerns regarding the company’s financial health.

Smartworks Coworking Spaces has reported strong topline performance and an impressive Ebitda margin of 62.39 per cent in FY25, highlighting the operational efficiency and scalability of its asset-light model. However, adjusted for lease liabilities, the EBITDA margin moderates to around 12.5 per cent, said Canara Bank Securities.

“It continues to post net losses, primarily due to accounting provisions under new lease standards, and financials remain complex for retail investors to evaluate clearly. While long-term prospects remain attractive, we believe the IPO is currently not favorable from a profitability and clarity standpoint. Hence, we assign an Avoid rating to the issue,” it added.

Lead managers for the IPO include JM Financial, IIFL Capital Services, BoB Capital Markets, and Kotak Mahindra Capital Company, with MUFG Intime India (Link Intime) as the registrar. The shares are set to be listed on both the BSE and NSE on July 17.

Smartworks appears to be fairly priced compared to its peers. Given its asset-light business model, capital efficiency through variable rental and management contracts, and the scale up of new revenue streams, which are margin accretive, further strengthen the business going forward, said Geojit Investments, suggesting a ‘subscribe’ rating to the IPO.

Key dates for the IPO include the opening and closing of the offer, and the listing on July 17. Retail investors and employees must confirm their UPI mandates promptly to ensure participation.