ICICI Securities has initiated its coverage on Indiqube Spaces Ltd. with a "buy" rating, setting a target price of Rs 334. This represents a potential upside of 46% from the current market price of Rs 230.
Expectations of growth in both revenue and profitability drive the brokerage firm's positive outlook. It also bets on Indiqube's strong positioning in India's booming office and flexible workspace markets.
Strong Growth Projections and Margin Expansion
The brokerage anticipates a notable 29% revenue CAGR and 45% Ebitda CAGR, post all lease rental payments, for Indiqube over the fiscal years 2025 to 2028.
This growth is expected to be fuelled by a combination of factors: an estimated 5% same-store revenue growth, a 21% CAGR in new seats, and an increase in revenue from value-added services, or VAS, which constituted 13% of its pure seat revenue in fiscal year 2025.
ICICI Securities also expects an expansion in EBITDA margins by 550 basis points to 18.7% by fiscal year 2028. This margin improvement is projected to come from a reduction in rental expenses as a percentage of operational revenue and an estimated annual utility cost savings of Rs 150-200 million from the company's solar power plant in Karnataka.
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Favorable Market Dynamics and Strategic Model
ICICI Securities believes Indiqube is well-positioned to capitalise on the strong demand in India's office leasing market, particularly within the flexible workspace segment.
The note highlights a remarkable recovery in office leasing, with pan-India net absorption reaching 49 million square feet in calendar year 2024, driven largely by global capability centres, or GCCs.
The firm expects this momentum to continue, projecting a cumulative net absorption of 159 million square feet over the calendar years 2024 to 2027.
The brokerage highlights Indiqube's unique supply acquisition strategy, which is focused on high-demand micro-markets. The company's hub-and-spoke model allows it to serve both large enterprises and smaller businesses, providing a comprehensive and adaptive platform.
This strategy has proven effective, with 85.39% of Indiqube's portfolio properties located in key micro-markets across Tier-1 cities.
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