IPO listed on 30 May'24
Awfis Space Solutions Ltd
Minimum Investment
₹ 14,937 / 39 shares
Grey market premium
₹ 150 (39% premium)
Issue price
₹ 383
Listing price
₹ 435
Listing gains
52 (14%)
Listing on
May 30, 2024
Subscribe for listing gains
- Financially, Awfis stands out from its competitors with a strong balance sheet, a low debt-to-equity ratio of 0.1x, superior return ratios, and high gross asset turnover. However, its operating margins are somewhat lower.
- The market for flexible workspaces in India has been expanding rapidly, with a growth rate of 30-40% annually over the past few years. The demand in Tier 2 cities is projected to surge to 8.5-9 million sq. ft. by 2026, outpacing supply by 1.7 times as of December 2023. As the leading player in the sector, Awfis is poised to capitalize on this burgeoning demand.
- However, increasing competition, operation risks and client retention remain a key challenge. Moreover, despite its consistent revenue growth, the firm is yet to reach profitability.
- Considering these factors, risk-tolerant investors seeking immediate gains from the IPO might opt to subscribe, while long-term investors should monitor the company's financial performance and expansion progress in the ensuing quarters before making investment commitments.
About the company
Founded in
17 Dec'14
Managing director
Amit Ramani
- Awfis Space Solutions Ltd (Awfis) stands as India's largest provider of flexible workspace solutions, leading in the number of centres operated. It offers an extensive array of options, from flexible desks for individuals to tailor-made office setups for start-ups, small and medium enterprises (SMEs), large corporations, and multinational companies.
- The core offerings of Awfis include co-working spaces, custom office spaces, and mobility solutions. Additionally, the firm provides construction and fit-out services (Awfis Transform) and facility management services (Awfis Care).
STRENGTHS
- Established Market Presence: Awfis leads the flexible workspace sector among the top five benchmarked players and is active in 16 cities across India. It has the widest network in the country’s micro-markets, managing 169 centres with 105,258 seats and has letters of intent for 13 additional centres, which will add 10,859 seats. As of December 31, 2023, Awfis serves over 2,295 clients across 52 micro-markets in India.
- Impressive Growth: Awfis has demonstrated robust growth, with its total income increasing at a Compound Annual Growth Rate (CAGR) of 62% from FY21 to FY23. Its revenue from customer contracts has also surged, growing at a CAGR of 75% from Rs 178.36 crore in FY21 to Rs 545.28 crore in FY23.
- Increasing Customer Base: Awfis has sold 10,743, 23,981, 36,020, and 27,484 seats in FY21, FY22, FY23, and 9MFY24 respectively. Notably, 32.18% of seat sales in 9MFY24 were to existing clients, indicating strong customer retention. The firm’s client base includes 2,295 clients, with 68.57% being large corporates or MNCs, such as Capgemini, Lenovo, and Fujitsu.
- Improving Operational Efficiency: The Managed Aggregation (MA) model boosts efficiency by balancing risks and rewards between Awfis and space owners. Since FY21, the share of operational seats under the MA model has risen from 46.3% to 66.4%, allowing Awfis to cut capital expenditure per seat to Rs 50,000, well below the industry average of Rs 80,000 to Rs 200,000. In this model, space owners contribute to fit-out infrastructure, bear capital costs, and exchange fixed rent for a minimum guarantee and a revenue/profit share under set terms.
RISK FACTORS
- Weak Track Record: Awfis has consistently reported losses over the past three years. Its future hinges on its ability to boost revenue and manage expenses effectively to reach profitability. Failure to meet these objectives could negatively affect its business operations, cash flows, and financial health.
- Negative Financial Indicators: In the last three fiscal years, Awfis has registered an average negative Earnings Per Share (EPS) of Rs (9.01) and an average negative Return on Net Worth (RoNW) of (38.60)%.
- Cash Flow Concerns: Awfis has encountered negative cash flows in recent fiscal years and may continue to experience such trends. Persistent or significantly negative cash flows could jeopardize its operational capabilities and growth strategies.
- Geographic Concentration Risks: As of December 31, 2023, a substantial 67.82% of Awfis’ rental income from co-working spaces came from centres in Bangalore, Mumbai, Pune, and Hyderabad. Any negative developments in these cities could substantially impact the firm’s revenues, operations, and financial condition.
Financials
Issue details
Issue type
Mainstream
Issue size
₹ 598.93 crore
Fresh Issue
₹ 128 crore
OFS
₹ 470.93 crore
Price range
₹ 364 - 383
Lot size
39 shares
Issue Objective
The net proceeds from the fresh issue are intended to be utilised towards:
- Funding capital expenditure towards establishment of new centres;
- Funding working capital requirements; and
- General corporate purposes.
Dates
Bidding open
22 May'24
Bidding close
27 May'24
Allotment date
28 May'24
Refund date
29 May'24
Listing
30 May'24
IPO Reservations
Qualified institutional buyers
>75%
Non-institutional investors
<15%
Retail individual investors
<10%
Read the Offer Document
© 2024 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
This document has been issued by Liquide Solutions Private Limited for information purposes only. It does not have regard to specific investment objectives, financial situation and the particular needs of any specific person who may receive this document. Investors should seek personal and independent advice regarding the appropriateness of investing in any of the funds, securities, other investment or investment strategies that may have been discussed or referred herein and should understand that the views regarding future prospects may or may not be realized. In no event shall Liquide Life Private Limited and / or its affiliates or any of their directors, trustees, officers and employees be liable for any direct, indirect, special, incidental or consequential damages arising out of the use of information / opinion herein.