ADD (Maintained) 

CMP: INR 709 Target Price: INR 757  7% ICICI Securities Limited is the author and distributor of this report

16 August 2024 India | Equity Research | Q1FY25 results review

Awfis Space Solutions

Real Estate

Delivering on guidance; compounding story intact

In its maiden quarter post listing on the stock exchanges, Awfis Space Solutions (Awfis) has delivered on its two main
FY25 guidance parameters: 30%+ revenue growth for FY25 and expansion in IGAAP EBITDA margin between 11.5-
12%. The company reported Q1FY25 consolidated revenue of INR 2.6bn, up 37% YoY and 11% QoQ with overall
occupancy at 71% and mature centre occupancy (>12 months) at 84%. With an overall operational + committed
pipeline of 127,726 seats (over 100,000 operational), we expect continued growth going ahead. We estimate 35%
operational seat CAGR, 31% revenue CAGR and 48% IGAAP EBITDA CAGR (EBITDA post lease payments) over FY24-
27E. We retain ADD and TP of INR 757 based on 25x Jun’26E IGAAP EBITDA.

Strong revenue traction leads to IGAAP EBITDA margin Adhidev Chattopadhyay

moving into double digits [email protected]
+91 22 6807 7451
The company reported Q1FY25 consolidated revenue of INR 2.6bn, up 37%
Saishwar Ravekar
YoY and 11% QoQ with overall occupancy at 71% and mature centre
[email protected]
occupancy (>12 months) at 84%. The company has started disclosing IGAAP
EBITDA (post all lease rental payments not captured under IND-AS income
statement) and its Q1FY25 EBITDA stood at INR 300mn with an IGAAP
EBITDA margin of 11.5% vs Q1FY24 IGAAP EBITDA of INR 80mn at 4.5%
EBITDA margin. The company achieved a net seat addition of 5,368 seats and
nine centres in Q1. As of Jun’24, the company has 100,398 operational seats
with 11,640 seats under fit-out and signed LOIs for another 15,688 seats (total Market Data
127,726 operational + committed pipeline). Market Cap (INR) 49bn
Market Cap (USD) 586mn
Strong revenue and EBITDA CAGR over FY24-27E Bloomberg Code AWFIS IN
Awfis’ strategy for expansion through the asset-light MA route and a Reuters Code AWFI.BO
combination of SL contracts may enable the company to grow operational 52-week Range (INR) 758 /371
seats at 35% CAGR over FY24-27E. We assume minimal blended occupied Free Float (%) 13.0
seat price increase (4-5% like-to-like) over FY24-27E with a steady state ADTV-3M (mn) (USD) 0.0
operational portfolio occupancy of ~70% over FY25-27E as new centres take
6-12 months to fully mature. We estimate the company could deliver 31% Price Performance (%) 3m 6m 12m
revenue CAGR over FY24-27E driven largely by seat expansion across cities. Absolute - - -
At the same time, we estimate it may clock 48% IND-AS 116 EBITDA CAGR Relative to Sensex - - -
over FY24-27E with EBITDA margin rising to 13.5% by FY27E from 9.2% as of
FY24 as the business sees operations of scale, higher contribution of non-seat
revenue and cost optimisation initiatives in existing centres.
Key risks: Slower office leasing and pricing competition in co-working spaces.
Financial Summary
Y/E March (INR mn) FY24A FY25E FY26E FY27E
Net Revenue 8,488 11,147 14,698 18,860
IGAAP EBITDA 780 1,329 1.860 2,548
IGAAP EBITDA Margin (%) 9.2 11.9 12.7 13.5
Net Profit (176) 316 840 1,007
EPS (INR) (2.8) 4.5 12.1 14.5
P/B (x) NM 12.0 9.9 8.3
P/E (x) NM 156.0 58.6 48.9
Previous Reports
EV/IGAAP EBITDA (x) NM 35.7 25.5 18.6
31-07-2024: Initiating Coverage
RoCE (%) 24.8 39.5 49.5 50.0
RoE (%) (8.4) 9.5 18.5 18.5

Please refer to important disclosures at the end of this report

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

Q1FY25 consolidated result snapshot

(INR mn) Q1FY25 Q1FY24 Q4FY24 YoY (%) QoQ (%)
Total Operating income 2,577 1,877 2,323 37.3 10.9

Raw Materials 631 421 534 50.2 18.2

Personnel Cost 391 284 364 37.6 7.4
Other Expenses 764 664 754 15.2 1.4
Total Expenses 1,787 1,369 1,652 30.6 8.2

INDAS EBITDA 790 508 671 55.5 17.8

INDAS EBITDA margin (%) 30.7 27.1 28.9 357.8 178.1

IGAAP EBITDA 300 80 NA 275.0 NM

IGAAP EBITDA Margin (%) 11.6 4.3 NA 737.7 NM

Interest (Net) 281 209 238 34.2 18.0

Depreciation 583 432 507 34.8 15.0
Other Income 101 50 88 102.2 15.3
Exceptional items 0 0 0 NM NM
Profit Before Tax 28 (83) 14 NM 102.8
Taxation - - - NM NM
Profit After Tax before 28 (83) 14 NM 102.8
MI/Associate
MI/Associate share - - 0
Reported PAT 28 (83) 14 NM 102.8
Net margin (%) 1.1 -4.4 0.6 NM 49.0
Source: I-Sec research, Company data

Company’s Q1FY25 supply highlights

Source: Company, I-sec research, *Numbers are for Total Chargeable Area and Centres, which includes operational and
under fitout, 2 LOI refers to Letters of Intent signed with space owners

India | Equity Research 2

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

Company’s Q1FY25 supply walkthrough

Source: Company, I-sec research, *LOI refers to Letters of Intent signed with space owners

Company’s occupancy and tenure profile

Source: Company, I-sec research

Company’s Q1FY25 demand mix

Source: Company, I-sec research, Note: *Include Food and beverage, personal and household products, Real estate ,
Chemicals, construction and packaging materials, Telecommunication services, Energy and utilities and Others

India | Equity Research 3

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

Financial Analysis
Owing to the competitive nature of the India co-working/flex spaces market and as
flex operators expand into tier II cities as well, we believe space addition and pre-
leasing/tie-ups with enterprise clients would be the key revenue driver over medium
term. We also expect a sector consolidation story in due course with larger organised
and branded players taking up centres from smaller players as clients gravitate
towards branded players across cities in India.

In this context, Awfis’ strategy for expansion through the asset-light MA route along
with a combination of SL contracts could enable the company to grow operational
seats at 35% CAGR over FY24-27E. We assume minimal blended occupied seat price
increase (4-5% like-to-like) over FY24-27E with a steady state operational portfolio
occupancy of ~70% over FY25-27E as new centres take 6-12 months to fully mature.

Note: As per the existing accounting standards under IND-AS, lease payment paid
to space owners/landlords by co-working/flexible space operators is accounted
below reported IND-AS EBITDA under line items of financial expenses and
depreciation which does not give an accurate picture of EBITDA growth and
EBITDA margin. Hence, we have calculated IGAAP EBITDA and EBITDA margin
which factor in the actual lease payments for the period.

Awfis key assumptions

(INR mn) FY24 FY25E FY26E FY27E
End of Period # of Total Operational Seats 95,030 1,30,190 1,81,454 2,32,718

End of Period # of Occupied Seats 67,116 91,112 1,27,438 1,62,903

Blended Occupancy % 71% 70% 70% 70%

Avg. Monthly Price per Occupied Seat 7,866 7,945 8,024 8,104
YoY Growth (%) 8.1% 1.0% 1.0% 1.0%
Source: Company data, I-Sec research

Company’s operational seats to grow at 35% CAGR over FY24-27E

Operational Seats YoY Growth (%)
250000 2,32,718 60
52.6
47.8
50
200000 1,81,454
39.3
37.0
40
150000 1,30,190 39.4
30
95,030
100000 28.3
68,203 20
46,152
50000 30,253 10

0 -
FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company, I-sec research estimates

We estimate the company may deliver 31% revenue CAGR over FY24-27E driven
largely by seat expansion across cities. At the same time, we estimate it may clock
48% IGAAP EBITDA CAGR over FY24-27E with EBITDA margin rising to 13.5% by
FY27E from 9.2% as of FY24 as the business sees operations of scale, higher
contribution of non-seat revenue and cost optimisation initiatives in existing centres.

India | Equity Research 4

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

With the company having estimated net cash balance of INR 0.4bn as of FY24 and
IPO proceeds of INR 1.3bn in Q1FY25, we expect it to generate adequate IGAAP
EBITDA each year between FY24-27E to match its capex, and thereby, retain an
average annual net cash balance of INR 1.7bn between FY25-27E.

Awfis’ revenue to grow at 31% CAGR over FY24-27E

Revenue (INR mn) YoY Growth (%)
20000 112.1 18,860 120
18000
100
16000 14,698
14000
80
12000 11,147

10000 8,488 60
44.1
8000 55.7
5,453 31.3 31.9 40
6000 28.3
4000 2,570
1,784 20
2000
0 -
FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company, I-sec research estimates

Awfis’ EBITDA to grow at 48% CAGR over FY24-27E

INDAS 116 EBITDA (INR mn) EBITDA Margin (%)
3000 13.5 15.0
11.9 12.7
2,548
2500 9.2
10.0
2000 1,860

1,329 5.0
1500 1.8

1000 780
-
-3.5
500
-5.8 100
-5.0
0
-62 -150
-500 -10.0
FY21 FY22 FY23 FY24 FY25E FY26E FY27E

Source: Company, I-sec research estimates

India | Equity Research 5

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

Valuation
Awfis has a unique business model. While the company does not act as a land
aggregator or landlord of office space, it focuses on providing services to its clients on
demand side and also partners with space owners/landlords on supply side. With
Awfis being the first co-working/flexible workspace company in India, there is also
limited scope for comparison with industry peers. Hence, we believe Awfis is more
comparable to listed hotel peers.

We believe given Awfis’ superior RoCE profile which may consistently range over
40% FY26E onwards and net cash balance sheet combined with an estimated 48%
EBITDA CAGR over FY24-27E, an EV/EBITDA of multiple of 25x is justified in line
with hotel peers.

We retain our ADD rating with an unchanged target price of INR 757/share based
on 25x Jun’26E IGAAP EBITDA of INR 2.0bn and adding net cash of INR 1.7bn.

Key risks: Slowdown in overall office leasing across India and pricing competition
among co-working flexible workspace operators.

Valuation of Awfis
Jun’26 INDAS116 EBITDA (INR mn) 2,032
Awfis Enterprise Value (EV) in INR mn (25x EV/EBITDA) 50,803
Add: Net Cash as of Jun’26 (INR mn) 1,727
Awfis Equity Value (INR mn) 52,530
Equity Value per Share (INR) 757
Source: Company data, I-Sec research

Shareholding pattern Price chart

% Mar‘24 Jun‘24 880
Promoters 28.6 28.6 680
Institutional investors 28.0 36.1
480
MFs and others 6.7 11.3
280
(INR)

FIs/Banks 3.9 1.6

Insurance 0.9 0.7 80
FIIs 16.6 22.5
May-24

Jul-24

Jul-24
Jun-24
Jun-24

Others 43.4 35.3 Aug-24

Source: Bloomberg Source: Bloomberg

India | Equity Research 6

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

Financial Summary
Profit & Loss Cashflow statement
(INR mn, year ending March) (INR mn, year ending March)

FY24A FY25E FY26E FY27E FY24A FY25E FY26E FY27E

Net Sales 8,488 11,147 14,698 18,860 Operating Cashflow 2,395 3,767 5,158 6,026
Operating Expenses 6,034 7,569 9,835 12,629 Working Capital Changes (112) 548 (50) 249
EBITDA 2,454 3,578 4,863 6,231 Capital Commitments (1,451) (1,327) (2,138) (2,283)
EBITDA Margin (%) 28.9 32.1 33.1 33.0 Free Cashflow 832 2,987 2,970 3,993
IGAAP Adjusted EBITDA 780 1,329 1,860 2,548 Other investing cashflow (169) - - -
IGAAP Adjusted EBITDA 9.2 11.9 12.7 13.5 Cashflow from Investing
(1,620) (1,327) (2,138) (2,283)
Margin (%) Activities
Depreciation & Amortization 1,960 2,203 2,570 3,034 Issue of Share Capital - 1,280- - -
Interest expenditure 930 1,282 1,690 2,169 Interest Cost (807) (1,248) (1,748) (2,258)
Other Non-operating 260 273 286 301 Inc (Dec) in Borrowings 213 150 (100) (150)
Income Dividend paid - - - -
Exceptional items - 50 50 50 Others (938) (997) (1,266) (1,712)
Recurring PBT (176) 366 890 1,329 Cash flow from Financing
(645) (815) (3,114) (4,121)
Profit / (Loss) from Activities
- - - -
Associates Chg. in Cash & Bank
18 2,172 (145) (128)
Less: Taxes - - - 272 balance
PAT (176) 316 840 1,007 Closing cash & balance 49 2,221 2,076 1,948
Less: Minority Interest - - - -
Source Company data, I-Sec research
Extraordinaries (Net) - - - -
Net Income (Reported) (176) 316 840 1,007 Key ratios
Net Income (Adjusted) (176) 316 840 1,007 (Year ending March)
Source Company data, I-Sec research, *post lease rental expenses
FY24A FY25E FY26E FY27E
Balance sheet Per Share Data (INR)
(INR mn, year ending March) Adjusted EPS (Diluted) (2.8) 4.5 12.1 14.5
Cash EPS 28.4 36.3 49.1 58.2
FY24A FY25E FY26E FY27E Dividend per share (DPS) - - - -
Total Current Assets 4,734 6,813 7,993 9,296 Book Value per share (BV) 40.0 59.2 71.3 85.8
of which cash & cash eqv. 49 2,221 2,076 1,948 Dividend Payout (%) - - - -
Total Current Liabilities &
4,130 4,929 6,589 8,136
Provisions Growth (%)
Net Current Assets 604 1,885 1,404 1,160 Net Sales 0.6 31.3 31.9 28.3
Investments - - - - EBITDA 0.6 NM 39.9 37.0
Net Fixed Assets 3,364 3,705 4,864 7,147 EPS (INR) (0.7) NM 166.1 19.9
ROU Assets 5,800 9,588 14,285 17,997
Capital Work-in-Progress 82 82 82 82 Valuation Ratios (x)
Total Assets 9,850 15,259 20,635 26,386 P/E NM 156.0 58.6 48.9
Liabilities P/BV NM 12.0 9.9 8.3
Borrowings 322 472 372 222 EV / EBITDA NM 35.7 25.5 18.6
Deferred Tax Liability - - - - P / Sales - 4.3 3.2 2.5
provisions - - - - Dividend Yield (%) - - - -
other Liabilities 7,014 10,678 15,313 20,208
Equity Share Capital 193 227 227 227 Operating Ratios
Reserves & Surplus 2,321 3,883 4,723 5,730 IGAAP EBITDA Margins 9.2 11.9 12.7 13.5
Total Net Worth 2,514 4,110 4,950 5,957 (%)
Minority Interest - - - - Net Profit Margins (%) (2.1) 2.8 5.7 5.3
Total Liabilities 9,850 15,259 20,635 26,386 Net Debt / Equity (x) 0.1 (0.4) (0.3) (0.3)
Source Company data, I-Sec research Debt/Adjusted EBITDA (x) 0.4 0.4 0.2 0.1

Profitability Ratios
RoCE (%) 24.8 39.5 49.5 50.0
RoE (%) (8.4) 9.5 18.5 18.5
Source Company data, I-Sec research

India | Equity Research 7

Awfis Space Solutions | Q1FY25 results review | 16 August 2024

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Awfis Space Solutions | Q1FY25 results review | 16 August 2024

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