Dev Accelerator IPO Opens: 'Subscribe For Long-Term' Says Anand Rathi —Check Issue Details

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Anand Rathi Report

Dev Accelerator Ltd.'s initial public offer launched on Sep. 10 and the offer closes for subscription on Sep. 12. The flexible workspace solutions provider has set the price band at Rs 56 to Rs 61 per share.

Investors can place bids starting from a minimum of 235 shares and in multiples thereafter.

The Rs 143-crore IPO is entirely a fresh issue of 2.47 crore equity shares worth Rs 143 crore at the upper end of the price band.

Pantomath Capital Advisors Pvt. Ltd. is the book-running lead managers for the public issue while KFIN Technologies Ltd. is the registrar to the offer.

Objects of the Issue:

• Capital expenditure for fit outs in the Proposed Centers.

• Repayment and/or pre-payment in full or parts of certain borrowings availed by the company including redemption of NCD’s issued by the company.

• General corporate purposes.

Key Strengths:

• Leadership position as one of the largest managed space operators in Tier 2 markets well positioned to capture industry tailwinds and growth prospects for the flexible workspace sector in India.

• Pan-India presence with consistently high occupancy rates across their Centers.

• Customer-centric business model with an integrated platform approach, ensuring long-term relationships with customers.

• Delivering strong financial and operating metrics.

Key Strategies:

• Expansion into new and existing markets.

• Enhance their client offerings.

• Enhancing their asset procurement strategy.

• Leveraging the potential of Global Capability Centres.

Valuation & Outlook:

Dev Accelerator offers comprehensive flexible workspace solutions—from individual desks to fully customized offices. The various services include managed offices spaces, coworking solutions, and design and build services. They also provide facility management, payroll, and IT/ITeS services through Saasjoy Solutions Private Limited. The company primarily caters to large corporates through managed office solutions, with average lease terms of 5–9 years and lock-in periods of 3.5–5 years.

Such long-duration contracts ensure steady revenue streams, strengthen client engagement, and support greater operational efficiency. India’s flexible office segment has become integral to commercial real estate, and the company is positioning itself as a leading managed space operator in Tier-2 cities.

With operations in four of the top seven Tier-1 markets and a strong presence across six Tier-2 locations, it consistently achieves high occupancy through quality service and strategic site selection. Looking ahead, the company intends to expand in both existing and new markets by adding four straight-lease centers covering 664,692 sq. ft. over the next two fiscals, while strengthening offerings in emerging regions. At the upper end of the price band, the company is valued at 305x FY25 P/E and 3.5x P/S, with a post-issue market capitalization of Rs 5,501 million.

It has broadened its offerings to include HR, IT, and software services through Saasjoy to strengthen client retention and address evolving workplace and technology needs. Additionally, via its associate Scaleax Advisory Private Limited, it helps GCCs build global teams in India by providing facility and payroll management, as well as recruitment solutions like talent sourcing, AI-based screening, and team augmentation. Considering these factors, the IPO is viewed as fully priced, warranting a “Subscribe – Long Term” recommendation.

Key Risk:

• The company incurred a loss of Rs 128.3 million during Fiscal 2023 and reported negative EPS. While they turned PAT positive in Fiscal 2024, they cannot assure that they will sustain profitability going forward. Their inability to sustain profitability by generating higher revenues and managing expenses may have an adverse effect on their business, results of operations, cash flows and financial condition.

• They do not own the land and buildings at any of their Centers. Any defect in the title and ownership of the land and building where their Centers are located may result in their Centers being shut down, result in relocation costs for them and termination of theie Client Agreement, which may adversely impact their results of operations and profitability.

• They acquired 43.7% of the paid-up equity share capital of Janak Urja Pvt. Ltd., one of their Associates and Group Companies, in pursuance of their PropCo-OpCo model and if they fail to realize the financial benefit of such investments, it could have a material adverse effect on their business, financial condition, cash flows and results of operations. Further, they may fail to successfully make acquisitions or investments and may not be able to successfully integrate acquisitions or achieve the anticipated benefits from these acquisitions or investments that they make.

• The company’s success largely depends on their ability to identify the preferred buildings/ properties in preferred locations and sourcing such Centers at the right rate of rental and other commercial terms. They intend to allocate an aggregate of Rs 731.2 million of the Net Proceeds towards capital expenditure for fit outs in the four Proposed Centers, out of which they have not entered into any agreements for two of the Proposed Centers. Any failure to do so will adversely affect their business, cash flow, results of operations and profitability.

• Their top 10 customers contributed 38.6%, 37.2% and 37.9% of their revenue from operations and their top 20 customers contributed 54.1%, 53.5% and 53.3% of their revenue from operations for the Fiscals 2025, 2024 and 2023, respectively. Any decrease in revenues or sales from any one of the company’s key customers may adversely affect their business and results of operations.

• The company’s Managing Director is involved in a venture which is in the same line of business as that of the Company.

• A portion of their new clients originate from brokers. The percentage of seats sold / facilitated through brokers as a percentage of the new seats sold was 19.5% in Fiscal 2023, and 75.4% in Fiscal 2024 which reduced to 43.8% in Fiscal 2025. In the event brokers gain market share compared to their direct booking channels or their competitors are able to negotiate more favorable terms with such brokers, their business, cash flows and results of operations may be adversely affected.

• They have entered, and will continue to enter, into related party transactions which may turn out to be prejudicial to their interests. Further, the company’s Promoter Directors and Key Managerial Personnel and members of their Senior Management have interest in them other than reimbursement of expenses incurred and normal remuneration or benefits.

• As of Fiscal 2025, Rs 803.9 million of their revenue from operations from their flexible working spaces was derived from Centers located in Tier 2 cities with Ahmedabad, Gujarat accounting for Rs 482.8 million constituting 30.4% of their revenue from operations. Accordingly, a significant portion of their revenues from flexible working spaces are derived from Centers concentrated in few cities and any adverse developments affecting such Centers, cities or regions could have an adverse effect on their business, results of operations and financial condition.

• The company’s cash flow from operating activities has been fluctuating in the past. They have experienced negative cash flows from investing activities of Rs 380.0 million, Rs 408.6 million and Rs 240.6 million in Fiscals 2025, 2024 and 2023, respectively. Further, they also have negative cash flows from financing activities of Rs 529.2 million and Rs 36.6 million in Fiscals 2025 and 2023, respectively, and may continue to do so in the future, which could adversely affect their business, prospects, financial condition, cash flows, and results of operations.

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