Smartworks IPO: SBI Securities wants investors to avoid this issue; what Anand Rathi says

Smartworks Coworking Spaces (SCSL) is set to launch its IPO on Thursday, July 10 to raise a total of Rs 582.56 crore via primary market, which includes a fresh share sale of Rs 445 crore and OFS of up to 33.79 lakh shares. It shall be offering its shares in the range of Rs 387-407 apiece, applied for a minimum of 36 equity shares and its multiples thereafter until Monday, July 14.

However, the issue has garnered mixed response from the stock analyst. Brokerage firm SBI Securities has suggested to ‘avoid’ this IPO due to its expensive valuations and consistent loss-making business. It believes companies like Awfis Space Solutions offer better investment opportunities within the coworking space due to their reasonable valuations and profitable business.

Another brokerage firm, Anand Rathi Shares & Stock Brokers believes that the issue is fully priced at the current valuations. However, it has a ‘subscribe for long-term’ rating on the issue. Even the grey market premium (GMP) is signaling muted single digit gains for the investors, where it is commanding a premium of Rs 28 per share.

Smartworks is one of the prominent customized managed workspace solutions offering companies with a diversified client base. It generates strong operating cash flows supported by its healthy operating metrics such as retention rate of 87 per cent (FY25) and committed operational occupancy rate of 89 per cent as of June 2025, said SBI Securities.

“Its revenue and Ebitda have grown at a CAGR of 39 per cent and 42.2 per cent, respectively between FY23-25. However, on a net basis, it is generating loss due to heavy depreciation. We recommend investors to ‘avoid’ the issue and track its performance post listing especially focusing on its capital efficiency through variable rental business model and managed contracts,” it added.

At the upper price band, the company is valuing at P/S of 3.3 times with EV/Ebitda of 9.7 times and market capitalization close Rs 4,645 crore post issue of equity shares. Promoter, who currently own 65.19 per cent stake in the company, will be left with 58.25 per cent stake after the IPO.

Smartworks is India’s largest managed campus operator with a leased portfolio of 8.9 million sq. ft. across 50 centres. It operates in the fast-growing flexible workspace market, especially in Tier 1 cities, and has outpaced industry growth with a 38.3 per cent CAGR from 2020–2024. It focuses on mid-to-large enterprises, which ensures longer client lock-ins and stable revenue, said Anand Rathi.

With fit-out and operating costs significantly lower than industry benchmarks, Smartworks runs a cost-efficient and scalable model. It is shifting to an asset-light strategy through variable rental and management contracts, improving capital efficiency. New revenue streams further strengthen its business, it added with a ‘subscribe for long-term’ rating to the IPO.

JM Financial, BOB Capital Markets, IIFL Capital Services and Kotak Mahindra Capital Company are the  book-running lead managers of the Smartworks Coworking Spaces IPO, while MUFG Intime India (Link Intime) is the registrar for the issue. Shares of the company shall be listed on both BSE and NSE with July 17, Thursday, as the date of market debut.