Smartworks Coworking Spaces Ltd.'s initial public offering opened for bidding on Thursday. The offering was subscribed 50% on its first day.
The price band for the IPO is set between Rs 387 and Rs 407 per share. The company will raise Rs 445 crore via a fresh issue of shares and will offer existing shares worth Rs 137.6 crore for sale, as per the red herring prospectus.
The company's market value at the upper end of the price band is Rs 4,644.8 crore.
Shares of Smartworks Coworking will debut on BSE and National Stock Exchange next week.
The company raised Rs 174 crore from anchor investors on Wednesday ahead of its initial public offering. The company allotted 42.7 lakh shares at Rs 407 apiece to 13 anchor investors.
The company intends to utilise the proceeds in repaying all the debts, fund capital expenditure and for other general corporate purposes. Capex will get Rs 225.84 crore and Rs 114 crore will be used for loan repayments.
IPO Details
Issue opens: July 10.
Issue closes: July 14.
Issue price: Rs 387-407.
Fresh issue: Rs 445 crore.
Offer for sale: Rs 138 crore.
Lot size: Minimum 36 shares.
Fundamental Outlook
On the positive side, the Smartworks Coworking boasts a significant presence with 50 centers across 15 cities, offering a substantial capacity of 2.03 lakh seats. A large portion of its rental revenue, specifically 75.19%, is concentrated in key metropolitan areas like Pune, Bengaluru, Hyderabad, and Mumbai. Furthermore, Smartworks is actively expanding, with additional centers planned for Pune, Kolkata, and Mumbai, aiming to increase its capacity by 20%.
However, there are also some potential negatives for investors to consider. The IPO pricing appears expensive, especially when compared to a preferential allotment in June 2024 at Rs 269 per share. Unlike some of its peers such as Awfis, Smartworks operates on an expense-centric business model. The company has also reported losses for the last three consecutive years. While the average tenure of clients stands at a decent 45 months, suggesting some client stickiness, the overall financial performance and pricing strategy warrant careful consideration.
Smartworks Coworking IPO Subscription Status
The Smartworks Coworking IPO was subscribed 50% as of 5:00 p.m. on Thursday.
Qualified Institutional Buyers: Nil.
Non-Institutional Investors: 1 time or 100%
Retail Investors: 0.57 times or 57%.
Portion Reserved for employees: 0.47 times or 47%.
Smartworks Coworking IPO GMP
The grey market premium of Smartworks is Rs 30 as of 7:29 p.m., according to InvestorGain. This implies shares of the company are estimated to list at Rs 437 apiece, indicating a 7.37% premium to the upper end of the price band.
It should be noted that GMP or grey market price is not an official price quote for the stock and is based on speculation.
Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisers and read red herring prospectus thoroughly before placing bids.
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