Smartworks to Launch IPO Amidst Improving Financials and Expansion Plans

Smartworks Coworking Spaces Ltd has reported a net loss of Rs 50 crore for the last fiscal year but is planning to launch an IPO to raise funds for expansion and debt repayment. The company aims to improve profitability by increasing revenue and reducing expenses, amidst a recovering office market.

Smartworks Coworking Spaces Ltd, preparing for its first public offering, recorded a consolidated net loss of nearly Rs 50 crore in the last fiscal year due to higher expenses.

Last week, the managed office space provider filed a draft red herring prospectus (DRHP) with capital markets regulator Sebi to raise funds through an Initial Public Offering (IPO). The DRHP reveals that the company's net loss for the 2023-24 fiscal was Rs 49.95 crore, a significant decrease from Rs 101 crore in the previous financial year. Despite the losses, total income increased to Rs 1,113.11 crore from Rs 744 crore the year before.

According to the DRHP, the proposed IPO includes a fresh issue of equity shares worth Rs 550 crore and an Offer-For-Sale (OFS) of 67.59 lakh shares by the promoters. The capital raised will be utilized for debt repayment, capital expenditures for new centers, and general corporate purposes. As of March 31, 2024, Smartworks had outstanding borrowings of Rs 427.35 crore. The company currently operates 41 co-working centers, with plans to expand to 43 centers across 13 cities including Delhi-NCR, Bengaluru, Hyderabad, and Chennai.

Despite booking a net loss for the last three fiscal years, Smartworks highlighted a positive EBITDA and aims to achieve profitability by generating higher revenue and reducing expenses. India's office market, particularly the co-working segment, has rebounded post-COVID, with other players like Awfis and Pune-based EFC (I) Ltd also launching public issues.