IPO Alert: Awfis Space Solutions opens today: Should you subscribe?

Awfis Space Solutions IPO Review: Workspace solutions provider Awfis Space Solutions’s initial public offering (IPO) opens for subscription on Wednesday, May 22 and will conclude on May 27. The IPO consists of a fresh issue of Rs 128 crore and an offer-for-sale (OFS) of around 1.2 crore equity shares, each with a face value of Rs 10.

The company offers a wide range of flexible workspace solutions, serving the needs of individuals, startups, small and medium enterprises, as well as large corporations and multinational corporations.

The offer follows a book-building process, with 75 per cent of the net offer allocated to qualified institutional buyers (QIBs), 15 per cent reserved for non-institutional buyers, and a cap of 10 per cent for retail buyers' reservations. 

Employees participating in the employee reserve segment are entitled to a discount of Rs 36 per equity share, with the employee reservation segment comprising equity shares totaling up to Rs 2 crore.

Awfis Space Solutions IPO price band

The price band for the IPO is set at Rs 364 to Rs 383 per share, with a minimum lot size of 39 shares. Retail investors need a minimum investment of Rs 14,937. For small non institutional investors (sNII), the minimum lot size investment is 14 lots (546 shares), totaling Rs 209,118, and for big NII, it is 67 lots (2,613 shares), amounting to Rs 10,00,779.

Awfis Space Solutions IPO size

The OFS involves the promoter selling shareholder, Peak XV Partners Investments V selling 66,15,586 equity shares. Other selling shareholders include Bisque Ltd, planning to sell up to 5,594,912 equity shares, and Link Investment Trust, likely to sell up to 85,201 equity shares, as detailed in the RHP. The total size of the Awfis Space Solutions IPO stands at Rs 599 crore.

Awfis Space Solutions IPO GMP

As of May 22nd, 2024, the last GMP (Grey Market Premium) for Awfis Space Solutions IPO is Rs 150. Considering the price band of Rs 383.00, the estimated listing price for the IPO is Rs 533 . This suggests an expected listing gain of 39.16 per cent per share.

Awfis Space Solutions IPO key dates

Awfis Space Solutions IPO opens for subscription on May 22, 2024, and closes on May 27, 2024. The allotment for the IPO is expected to be finalised on Tuesday, May 28, 2024. It will list on BSE and NSE with a tentative listing date yet to be announced.

Awfis Space Solutions IPO financials 

The company revenue increased to Rs 565 crore in fiscal year 2022-23 (FY23) from Rs 278 crore in FY22. It reported a net loss of Rs 46 crore in FY23 versus Rs 57 crore in FY22. For the first nine months of FY24, the company reported a revenue of Rs 633 crore and a net loss of Rs 18 crore.

Awfis Space Solutions IPO lead book runners

ICICI Securities Limited, Axis Capital Limited, Iifl Securities Ltd, and Emkay Global Financial Services Ltd are the book running lead managers of the Awfis Space Solutions IPO, with Bigshare Services Pvt Ltd serving as the registrar for the issue.

So, should you subscribe? Here’s what key brokerages concur: 

Anand Rathi

The company has a price to sales ratio of 4.9x of its FY23 earnings. The company has shifted to an asset light model which will show benefits in the coming time period.

The company has a large total addressable market (TAM) driven by factors such as enterprise focus on flexibility, cost optimisation, 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. 

Looking at these factors we recommend “Subscribe –Long Term” rating to the IPO.

Swastika

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.

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, we recommend a neutral stance on the Awfis IPO. 

Investors should conduct thorough due diligence and closely monitor the company's progress before making a final decision.

Mastertrust

Awfis Solutions plans on continuing to build an industry leading capital efficient model in order to keep hold of the market share and increase the percentage of operational centres and seats under the MA model.

The company also intends to expand in new and existing markets by evaluating potential locations and cities based on multiple criteria. But the company has incurred losses in the past financial years. Investors looking to invest can invest for listing gains.