Awfis Space Solutions IPO – Key details & analysis

Are you considering investing in Awfis Space Solutions IPO? 

So, what should you consider when selecting an initial public offering (IPO)? 

What is the financial health of Awfis? Is it a profitable company, or is it burning cash for growth? How much borrowings are there in this business, and how will this money be used from the IPO proceeds? Will it help with expansion plans or debt repayment?

By answering these questions, you can understand better whether Awfis Space Solutions presents a viable investment opportunity.

So, let’s find these answers. 

About Awfis Space Solutions 

Established in 2014, Awfis Space Solutions has emerged as a premier supplier of adaptable workspace solutions across India. They serve various clients, from solo freelancers to well-established companies, providing a variety of solutions tailored to your requirements. 

Awfis Space Solutions Private Limited goes beyond just coworking spaces. They offer various options, including private offices, hot desks, and meeting rooms, all available on flexible terms.

Whether you are a growing startup or a downsizing company, Awfis coworking space can adapt to your changing needs. They even offer amenities like food and beverage services, event hosting capabilities, and IT support, allowing you to focus on what matters most – your work.

As of December 31, 2023, Awfis Space Solutions has 169 centres across 16 Indian cities, offering a total of 105,258 workspaces. 

Let’s see the company’s shareholding pattern pre-issue: 

Also read: Understanding the difference between equity and debt IPO for the right investment 

Awfis Space Solutions IPO

Awfis Space Solutions is all set to launch its IPO, and they have priced their shares quite attractively, between ₹364 and ₹383 each. These shares have a face value of ₹10, so it is a great deal! 

Mark your calendars because the subscription window opens on Wednesday, May 22, and you have until Monday, May 27, to get in on the action. 

The minimum you can bid for is 39 shares, and if you want more, just keep adding in multiples of 39. 

The proposal is being presented via the book-building method. Here, 75% of the net offer is allocated to qualified institutional buyers (QIBs), 10% is reserved for retail buyers, and 15% is set aside for non-institutional buyers. 

The IPO of Awfis Space Solutions includes a new issue valued at ₹128 crores, along with an offer-for-sale (OFS) amounting to ₹470.93 crores. If priced at the top of the range, the company’s total fundraising through the IPO would be ₹598.93 crores. 

The company has set aside equity shares valued at up to ₹2 crore for its staff.

The IPO of Awfis Space Solutions is being managed by Axis Capital Limited, ICICI Securities Limited, Emkay Global Financial Services Ltd and IIFL Securities Ltd as the book-running lead managers. 

Must read: Understanding IPO valuation through relative and absolute methods 

Fund utilisation plan

The company’s intended uses for the net proceeds is as follows: 

• Capital expenditure: The company plans to allocate ₹42.03 crores for the establishment of new centres. 
• Working capital: A sum of ₹54.37 crores is allocated to address the working capital needs of the company.
• General corporate purposes: Part of the funds raised will also be allocated for various corporate needs. The exact amount for this purpose is not specified.

Awfis Space Solutions financials

Here is a snapshot of the company’s key financial indicators: 

(₹ in millions)

Also read: INOX India Q4 results: Profits and revenue see strong gains

Investment considerations

Strengths

• By 2026, the flexible workspace operators can exploit a total addressable market of 282 million sq. ft. (in area) and ₹474-592 billion (in value). Being the leading company in flexible workspace solutions in India, with the highest number of centres as of December 31, 2023, the company is strategically positioned to leverage and seize the growth opportunities in the flexible workspace sector. 
• With its original MA (managed aggregation) model the company has reimagined their approach towards sourcing space, and it is a paradigm shift from the conventional coworking industry. 

Through an MA model that allows for less traditional real estate-related capital-intensive liabilities involving investments, the company has been able to grow faster and more efficiently respond to market changes ensuring strong ties with stakeholders regardless of uncertainty in the market.

Weaknesses

• The general level of commercial activity in the regions where the company operates and economic conditions significantly affect demand for the services and products the company offers. Thus, impacting their performance metrics and operations outcomes.
• The company has incurred negative earnings per share (“EPS”), negative return on net worth (“RoNW”), and net losses in recent years. To achieve profitability, they must generate higher revenues while controlling their expenses, and failure to meet these objectives could seriously harm the business prospects. 

Bottomline

In conclusion, when considering investing in the Awfis Space Solutions IPO, it is crucial to evaluate several key factors. Examine the company’s financial health and how the company will use the IPO proceeds. Additionally, consider the company’s market position and growth potential in the flexible workspace sector. 

By analysing these aspects, you can better determine if Awfis Space Solutions offers a viable investment opportunity.