About Smartworks Coworking Spaces Limited

BUSINESS OVERVIEW

Smartworks is a leading office experience and managed campus platform in India. As per the CBRE Report, it held the position of the largest managed campus operator among benchmarked peers by total stock, with a lease signed portfolio of 8.0 million sq. ft. as of March 31, 2024, and a total managed Super Built-up Area (SBA) of 8.99 million sq. ft. as of March 31, 2025.

The platform enhances enterprise productivity by offering value-centric pricing and superior office experiences compared to traditional workspaces, enriched with amenities such as cafeterias, sport zones, Smart Convenience Stores, gyms, crèches, and medical centres. These amenities cater to both daily and aspirational needs of employees, encouraging collaboration and well-being.

Landlords, particularly passive and non-institutional, benefit from transforming bare-shell properties into 'Smartworks'-branded, fully serviced managed campuses. The company targets mid-to-large Indian corporates, MNCs, and startups, delivering modern, aesthetic designs and integrated proprietary tech solutions across campuses.

As of March 31, 2025, the platform operates across 50 Centres in 15 cities, including Bengaluru, Pune, Hyderabad, Gurugram, Mumbai, Noida, and Chennai, with a capacity of 203,118 seats. It served 738 clients occupying 152,619 seats. As of June 30, 2025, it had 728 clients with 169,541 seats, of which 12,044 seats were unoccupied.

Launched in FY23, the Value-Added Services (VAS) model includes a revenue-sharing arrangement with service partners such as Chaipoint, Park+, ClearTax, Nutritap Technologies, and CloudKitch. A new offering, Fit-out-as-a-Service (FaaS), was introduced in 2024.

The client portfolio includes major names like Google IT Services India Pvt Ltd, L&T Technology Services Ltd, Bridgestone India Pvt Ltd, Philips Global Business Services LLP, Persistent Systems Ltd, Groww, and MakeMyTrip (India) Pvt Ltd, many of whom have multi-location, long-term contracts. As of March 31, 2025, the comapny have 794 permanent employees across their operations. The Bankers to the Company is HDFC Bank Limited, DBS Bank India Limited, ICICI Bank Limited and Indian Bank.

INDUSTRY ANALYSIS

Indian Office Market Overview (as of Q1 CY2025)

India’s commercial office space reached approximately 883 million sq. ft. as of Q1 CY2025, concentrated mainly in the top 9 cities—Bengaluru, Mumbai Metropolitan Region (MMR), Hyderabad, Gurugram, Chennai, Pune, Noida, Kolkata, and Delhi. Around 80% (706 Mn sq. ft.) of this stock is non-SEZ, while 20% (177 Mn sq. ft.) comprises SEZ stock, all considered part of the organized office market.

Evolution and Growth of Office Stock

India’s office space has expanded 20x since the early 2000s, growing from around 44 Mn sq. ft. pre-2003 to 883 Mn sq. ft. in Q1 CY2025. The market witnessed a strong CAGR of 8.2% between CY2011 and CY2018, with stock rising from 341 Mn sq. ft. to 591 Mn sq. ft. An additional 292 Mn sq. ft. was added between CY2019 and Q1 CY2025.

This growth has been driven by strong demand-supply fundamentals, pro-business reforms, and increased transparency. India’s office real estate has become an attractive asset class for global sovereign and pension funds, with many adopting long-term investment horizons (10–15 years), bringing stability to the sector.

Rise of Domestic Enterprises

Indian companies have become major drivers of office demand, accounting for 47% of leasing in CY2024. Buoyed by steady economic growth, robust capital availability, and government-led infrastructure development, domestic firms are expanding aggressively.

In parallel, India’s startup ecosystem—now the third-largest globally—has seen rapid growth, supported by initiatives like Startup India, Atal Innovation Mission, and Innovations for Defence Excellence. As of January 2025, India had over 1.59 lakh recognized startups, with 49% based in Tier 1 cities, and 118 unicorns shaping innovation across sectors.

Several Indian startups such as Oyo, Ola, Tonbo Imaging, Lenskart, and MakeMyTrip are also entering global markets through strategic partnerships and acquisitions, expanding office space demand across sectors like travel, SaaS, and consumer brands.

Post-COVID Recovery and Market Momentum

After achieving 66.6 Mn sq. ft. of gross absorption in CY2019, the office market experienced a slowdown in CY2020–CY2021 due to the pandemic. However, the market rebounded in CY2022 with 62.0 Mn sq. ft. absorbed, driven by improved vaccination rates, relaxed restrictions, and rising workplace attendance.

In CY2023, further recovery was seen with 68.0 Mn sq. ft. of gross absorption, reflecting a 9.7% YoY growth and 52% increase over CY2021. Cities like Hyderabad, Chennai, and Mumbai led this growth due to quality supply additions, infrastructure upgrades, and competitive rentals.

India’s office sector reached a record high absorption of ~78.9 Mn sq. ft. in CY2024, supported by stronger economic activity, high employee return rates, and robust occupier sentiments. In Q1 CY2025, gross absorption stood at 17.4 Mn sq. ft. with 10.2 Mn sq. ft. of new supply. The influx of investment-grade office space is expected to continue through CY2025.

Occupiers in CY2024 showed a preference for high-quality spaces, focusing on portfolio expansion and consolidation, enabled by financial resilience and a well-capitalized business environment.

Conclusion

The Indian office market is undergoing sustained expansion, driven by domestic demand, start-up growth, foreign investments, and a favorable policy environment. With strong absorption trends, new supply pipelines, and the rising influence of Indian firms and tech startups, the sector is well-positioned for further growth in CY2025 and beyond.

BUSINESS STRENGTHS

1. Market Leadership with Scalable Growth
Smartworks is the largest managed campus operator among benchmarked peers, with a lease signed portfolio of 8.0 million sq. ft. (Source: CBRE Report). It has four centres above 0.5 million sq. ft., including the largest at 0.7 million sq. ft. in Vaishnavi Tech Park, Bengaluru.

2. Expertise in Transforming Large Properties into Managed Campuses
Demonstrates strong capability to lease and convert large/bulk properties into ‘Smartworks’-branded, amenity-rich campuses across India’s key clusters. Present in 14 Indian cities and Singapore as of March 2025.

3. Focused Client Acquisition Strategy
Caters to enterprise clients with seat requirements ranging from under 50 to over 6,300 seats, with emphasis on mid-to-large enterprises. Notable client deal sizes include 6,300+ seats (FY25), 4,800+ (FY24), and 3,500+ (FY23), showcasing scale and enterprise focus.

4. Operational Efficiency & Technology Integration
Employs modular and reusable fit-outs, standardised designs, and proprietary technology to ensure cost efficiency and consistent, high-quality delivery tailored to client requirements.

5. Capital Efficiency with Short Payback Periods
Demonstrates strong capital discipline, with payback periods significantly lower than industry averages—30–32 months for mature centres compared to 51–52 months industry average (Source: CBRE Report).

6. Risk-Mitigation Driven Business Model
Follows a risk-mitigated approach that supports predictable growth, financial stability, and client retention, even in competitive environments.

7. Experienced Leadership and Visionary Founders
Led by Neetish Sarda, who brings early exposure to large-scale operations, and Harsh Binani, an ex-McKinsey & Co consultant with global expertise in strategy and finance. The leadership team combines entrepreneurial agility with experience in real estate, finance, and operations.

BUSINESS STRATEGIES

1. Leveraging Market Leadership for Core Business Expansion
Positioned as the largest managed campus operator with a lease signed portfolio of 8.0 million sq. ft. (Source: CBRE Report), Smartworks aims to scale within India’s vast 883 million sq. ft. commercial office market.

2. Enhancing Capital Efficiency via Evolving Rental Models
Operating a total managed SBA of 8.99 million sq. ft., the company is transitioning from a straight lease model toward more variable rental and managed contract models to improve capital efficiency.

3. Scaling Margin-Accretive Revenue Streams
With access to a client ecosystem exceeding 738 enterprises and 100,000 employees, the platform is positioned to monetise its design, sourcing, and technology capabilities through bundled solutions and cross-selling across ancillary services.

4. Expanding Proprietary Technology for Operational Gains
A proprietary tech platform integrates clients, employees, and service partners, enabling process optimisation and new monetisation opportunities across the managed campus ecosystem.

5. Strengthening ESG Commitment
Since June 2023, a structured environmental, social, and governance (ESG) program has been underway, aligning the business with sustainability goals and long-term social responsibility objectives.

BUSINESS RISK FACTORS & CONCERNS

1. Geographic Revenue Concentration Risk
In Fiscal 2025, 75.19% of rental revenue was generated from centres located in Pune, Bengaluru, Hyderabad, and Mumbai. Any adverse developments in these key markets could significantly impact overall business performance.

2. Client Concentration and Negotiation Risk
A majority of business is focused on mid-to-large Enterprise Clients with requirements exceeding 300 seats, contributing 63.44% of rental revenue in Fiscal 2025. These clients often operate across multiple centres and cities, possessing stronger negotiation leverage. Loss of such clients or inability to replace them could negatively affect revenues and profitability.

3. Property Sourcing and Location Risk
Success relies heavily on identifying and sourcing the right properties in prime locations at competitive terms. Inability to do so may affect cash flows, profitability, and long-term viability.

4. Long-Term Lease Commitment Risk
Smartworks operates on long-term fixed cost lease agreements covering 8.99 million sq. ft. across 50 centres in 15 cities. These leases typically range from 10 to 15 years, often exceeding client contract durations. Lease payments to landlords are mandatory regardless of workspace occupancy, posing financial exposure if centres remain underutilised.

5. Client Tenure Mismatch and Vacancy Risk
While no centres have remained completely vacant in the past three fiscals, client contracts generally have shorter durations and lower lock-in periods compared to landlord lease agreements, increasing revenue risk.

6. Dependency on Key Clients
A substantial portion of rental income is derived from a limited number of large, multi-city clients. Premature termination, non-renewal, or attrition of any top 20 clients could have a material adverse effect on revenue and financial stability.

Smartworks faces risks from geographic and client concentration, long-term lease obligations, and dependency on large enterprise clients with strong negotiating power. Sustained success hinges on the company’s ability to maintain high occupancy, retain key clients, and strategically manage long-term lease commitments across diverse locations.