 "Decent debut: Awfis Space Solutions lists at 14% premium over issue price")
Awfis Space Solutions, India's leading provider of flexible workspace solutions, made a good stock market debut, with its shares listed at Rs 435, a 14 per cent premium over its issue price of Rs 383 per share on the National Stock Exchange (NSE) on Thursday. The stock listed 13 per cent higher at Rs 432.25 on the BSE.
Post listing, the stock moved higher to Rs 451, up 18 per cent when compared with its issue price on the NSE and BSE. At 10:06 am; the stock quoted around Rs 446 on the NSE. A combined 6.6 million equity shares changed hands on the NSE and BSE. In comparison, the benchmark indices were down 0.5 per cent.
While not explosive, Awfis Space Solutions' listing presents a decent starting point. The strong subscription highlights the attractiveness of the co-working space market, but the company's financial situation requires ongoing monitoring, said Shivani Nyati, Head of Wealth, Swastika Investmart in a note.
The issue was subscribed a whopping 108.17 times. The category for qualified institutional bidders (QIBs) was subscribed 116.95 times and the allocation for non-institutional investors was booked 129.27 times. The quota reserved for retail investors was subscribed 53.23 times.
The company will use net proceeds from the IPO to fund capital expenditure for the establishment of new centre, working capital requirements and general corporate purposes.
Awfis Space offers a comprehensive range of options. These solutions cater to various needs, from individual flexible desks to customized office spaces designed for start-ups, small and medium enterprises (SMEs), large corporations, and multinational companies.
The company has a large Total Addressable Market (TAM) driven by factors such as enterprise focus on flexibility, cost optimization, workforce fluidity, reverse migration, workplace evolution, focus on wellness, facilities, and amenities, as well as growth of start-ups in Tier 1 and Tier 2 cities.
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The future outlook for the flexible workspace industry in India is promising, driven by evolving work preferences, technological advancements, and the expanding startup ecosystem. Providers like Awfis, with their extensive network and diverse offerings, are well-positioned to capitalize on these trends. As the market continues to evolve, companies that can adapt to changing demands and offer innovative, flexible solutions are expected to thrive, Ventura Securities said.
Awfis, a leading player in the rapidly expanding Indian workspace solutions market, leverages an integrated platform approach to cater to diverse space sourcing and demand needs. While the company exhibits promising top-line growth, achieving profitability remains a key challenge. Awfis has experienced negative cash flow in the past and operates in a highly competitive environment susceptible to macroeconomic fluctuations, Swastika Investmart had said in its IPO note.
Given the negative EPS, a P/E ratio cannot be calculated. Considering the potential for future growth balanced against the current financial situation and competitive landscape, the brokerage had recommended a neutral stance on the Awfis IPO.
The total addressable market for flexible workspace in India is projected to reach 282 million sq. ft. (Rs 474-592 billion) by FY26, and Awfis is well-positioned to capture this growth, particularly in Tier 2 cities where demand is rising.
The company plans to invest Rs 42.03 crore million to establish 12 new centers by FY25 and upgrade existing workspaces in Tier 1 cities. With a strategic expansion plan and efficient operating model, Awfis is set for continued growth. The company’s revenue grew 112.13 per cent year-on-year (YoY) in FY23. A strong double digit growth is expected to continue in FY25 aided by strategic expansion plans. The company’s bottom line is also expected to improve in the coming quarters due to the company’s MA model which is reducing the capital expenditure per seat gradually for the company, said brokerage firm SMIFS.